US software stocks scale fresh 2026 highs as AI disruption worries fade
IGV•US software stocks reached their highest levels since November 2025, with the sector index rising 1.3% Tuesday. Expected 2026 earnings growth climbed to 20.6% from 13.8% at the end of March.
1. Earnings expectations rise
The S&P 500 software and services index gained 1.3% Tuesday, reaching its highest level since November 2025, after its biggest quarterly jump since the second quarter of 2020. The sector has risen 5% this year, while expected annual earnings growth for 2026 increased to 20.6% from 13.8% at the end of March.
2. AI fears ease, risks remain
Strong earnings from Salesforce, ServiceNow and Accenture, along with partnerships with AI labs, have helped drive a recovery underway since late June. Cybersecurity companies CrowdStrike, Fortinet and Palo Alto Networks posted triple-digit percentage gains this year. Analysts said fears that companies would use AI to build software in-house had run ahead of evidence, but one strategist said the technology could pose a greater threat when more data center capacity is available in the second half of 2027.
