The iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV) has staged a powerful recovery after Wall Street briefly abandoned the fund over AI fears.
The ETF fell by more than a third from its peak as investors grew concerned that artificial intelligence systems would upend the traditional software industry.
Two specific fears drove the sell-off, centred on AI’s potential to make legacy software redundant and shrink the pool of per-user licence revenue.
The concern was that AI programming assistants like Anthropic’s Claude Code could allow businesses to build their own versions of popular enterprise software products.
Additionally, if AI reduces the number of workers needing software tools, companies selling on a per-user basis could see sharp revenue declines.
However, recent earnings reports from leading software-as-a-service companies suggest those fears were significantly overblown for now.
The ETF has rebounded 40% from its 52-week low set on April 10, and now sits only about 11% below its prior peak.
IGV holds 111 stocks, with its top 10 positions accounting for 62% of the portfolio’s total value.
Oracle leads the fund at a 10.4% weighting, followed by Microsoft at 7.7% and Palo Alto Networks at 7.6%, as of June 1, 2026.
Palantir Technologies, CrowdStrike, Salesforce, Applovin, ServiceNow, Cadence Design Systems, and Adobe round out the top 10 holdings.
Palo Alto Networks and CrowdStrike have bucked the broader software sell-off entirely, with both stocks trading near record highs.
Beyond the top 10, the ETF also holds positions in cloud observability company Datadog, gaming company Take Two Interactive, and enterprise software firm Atlassian.
ServiceNow, Atlassian, and Salesforce each delivered accelerating revenue growth in their most recently reported quarters, directly contradicting the narrative that AI is destroying software demand.
Atlassian recently introduced a value-based pricing model called Flex, allowing enterprises to set a fixed budget and allocate it freely without negotiating new terms or predicting licence needs.
Since its inception in 2001, IGV has delivered a compound annual return of 9.2%, outpacing the S&P 500’s annualised return of 8.5% over the same period.
