As concerns over the disruptive impact of artificial intelligence subside, US software stocks reach new highs for 2026.
路透社2026/10/06 14:16Joel Jose, Reuters, October 6 - U.S. software stocks are reaching new highs in 2026, thanks to a sharp rise in profit expectations. Several analysts point out this indicates that concerns over industry disruption triggered by artificial intelligence have been largely exaggerated. The S&P 500 Software & Services Index (.SPLRCIS) rose 1.3% on Tuesday to its highest level since November 2025, following its biggest quarterly gain since Q2 2020 between July and September. Strong earnings reports from software companies such as Salesforce (CRM.N), ServiceNow (NOW.N), and Accenture (ACN.N), along with collaborations with AI labs, have fueled a sustained rebound in the sector since late June. Cybersecurity stocks performed particularly well. Crowdstrike (CRWD.O), Fortinet (FTNT.O), and Palo Alto Networks (PANW.O) all posted triple-digit gains this year, driven by large-scale enterprise investments in cybersecurity in the age of AI. "For many software companies, AI acts more as an enabler than a disruptor," said Adam Turnquist, Chief Cross-Asset Strategist at LPL Financial. "We are witnessing a trend reversal, with the software sector regaining its leadership position, and we believe this provides a good opportunity for software to outperform the semiconductor sector." So far this year, the software index has risen 5%, while the Philadelphia Stock Exchange Semiconductor Index (.SOX), which aggregates many U.S. chipmakers, has surged 87.5% in 2026, though it still lags behind its historical high. According to data from London Stock Exchange Group (LSEG), the sector’s expected annual profit growth rate for 2026 has climbed from 13.8% at the end of March to 20.6%. Concerns over a “SAASPOCALYPSE” were exaggerated From late January to the trough in April, the software index fell more than 26% in what was dubbed the “SaaSpocalypse,” a wave of selling triggered by concerns that enterprises might use AI to develop applications in-house at lower costs. Analysts now say those fears were premature. “The whole arrival of the ‘SaaSpocalypse’ has been much slower than some on Wall Street anticipated,” said Rebecca Wettemann, CEO of tech research firm Valoir, adding that as AI applications move beyond experimentation, vendors are reporting growing customer adoption. Even so, the rapidly evolving technology continues to pose risks by disrupting business models. Brian Mulberry, Chief Market Strategist at Zacks Investment Management, said the true test for software stocks may come in the second half of 2027, when increased data center capacity could see AI programming pose a greater threat to traditional software companies. (For non-native English speakers’ convenience, Reuters automatically translates its reports into multiple languages. Automated translations may contain errors or lack needed context, and Reuters does not guarantee the accuracy of automated texts, which are provided for readers’ convenience only. Reuters is not responsible for any damage or loss caused by the use of automated translation.)
Joel Jose
Reuters, October 6 - U.S. software stocks are hitting new highs in 2026, thanks to a sharp rise in earnings expectations. Multiple analysts point out this suggests market concerns over industry disruption driven by artificial intelligence have been largely exaggerated.
The S&P 500 Software & Services Index .SPLRCIS rose 1.3% on Tuesday, reaching its highest level since November 2025, after recording its biggest quarterly gain since the second quarter of 2020 during July to September.
Strong earnings reports from software companies such as Salesforce CRM.N, ServiceNow NOW.N and Accenture ACN.N, along with collaboration with artificial intelligence labs (link), have fueled the sector's sustained recovery momentum since late June.
Cybersecurity stocks have performed particularly well, with Crowdstrike CRWD.O, Fortinet FTNT.O and Palo Alto Networks PANW.O all recording triple-digit gains this year, thanks to heavy investment by companies in cybersecurity during the AI era.
"For many software companies, AI is more of an enabler than a disruptor," said Adam Turnquist, Chief Cross-Asset Strategist at LPL Financial.
"We're currently witnessing a shift in trend, the software sector has reclaimed its leading position, and we believe this creates a good opportunity for the software sector to outperform the semiconductor sector."
So far this year, the software index has risen by 5%, while the Philadelphia Stock Exchange Semiconductor Index .SOX, which includes many U.S. chipmakers, has soared by 87.5% in 2026, though it still remains far from its historic high.
According to London Stock Exchange Group (LSEG) data, the sector's expected annual earnings growth rate for 2026 has climbed from 13.8% at the end of March to 20.6%.
Concerns about "SAASPOCALYPSE" have been exaggerated
From late January to the low point in April, the software index fell by more than 26%, a sell-off dubbed as "SaaSpocalypse" by (link), triggered by worries that companies could use AI to develop applications internally at lower costs.
Analysts now say such concerns were premature.
"The whole 'SaaSpocalypse' hasn’t come nearly as fast as some on Wall Street expected," said Rebecca Wettemann, CEO of tech research firm Valoir, adding that as AI applications move beyond the experimental stage, vendors report customers are increasingly adopting them.
Nevertheless, as this rapidly developing technology disrupts business models, the sector still faces risks.
Brian Mulberry, Chief Market Strategist at Zacks Investment Management, stated that the real test for software stocks may emerge in the second half of 2027, as increased data center capacity could make AI programming a bigger threat to traditional software companies.
(To serve non-native English speakers, Reuters has automated the translation of its reports into several other languages. As automated translation may contain errors or lack required context, Reuters does not guarantee the accuracy of automated translations and provides them purely for reader convenience. Reuters bears no responsibility for any damage or loss arising from the use of automated translation.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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