Software Stocks Rally Amid AI Strategies

During the week ending May 28, 2026, the software sector experienced a stunning rebound, marking the most significant month for technology‑focused exchange‑traded funds (ETFs) since October 2001. This revival followed a period of retreat that had seen software names battered by the surge in “vibe coding” and other low‑barrier development platforms.

The iShares Expanded Tech‑Software ETF surged 8% in the week, bringing its monthly gain to 21% as AI integration became the headline driver. The ticker’s year‑to‑date decline of 3.8% has lessened, remaining only 3.8% below the Nasdaq’s 18% gain.

Snowflake stands out as the most prominent catalyst. The data‑platform provider posted a record‑breaking day earlier in the week, and after a holiday Monday it added nearly 50% to its near‑term performance. CEO Sridhar Ramaswamy highlighted the company’s $6 billion partnership with Amazon to blend cloud and chip expertise, and fresh guidance reflected customer migration to AI tools. Analysts upgraded the price target to $300, noting Snowflake’s capacity to unify data – a prerequisite for generative AI success.

Okta, a leading identity‑security firm, recorded a 30% jump after reporting stronger than expected results. The company underscored that an intensifying wave of agentic AI forces organizations to invest heavily in authentication and defense against bot armies. CEO Todd McKinnon signaled that AI deployments, while lengthy, will necessitate “fundamental infrastructure” in the coming years.

Other software names that bolstered the rally included Atlassian (+26%), ServiceNow (+20%), Shopify, Workday, Asana—all climbing 14% or more. Cloud‑infrastructure giants Oracle (+16%) and Microsoft (+8%) also added momentum, though Microsoft remains down 7% for the year—a notable underperformance among the sector’s megacaps.

Retail investors have increasingly poured money into the largest software ETF, with record buying on Monday. Data from Vanda Research showed a significant influx of retail capital, a trend that mirrors institutional focus on AI‑powered software investments.

All these moves illustrate how companies actively aligning with AI have positioned themselves as beneficiaries of the current technology shift. Investors appear to view AI‑enabled data unification and secure access as essential platforms for future growth, turning what was once an AI panic into a sustained rally.