Software stocks wrap up best month since 2001 as talk of ‘SaaSpocalypse’ subsides Software stocks experienced a significant rally, with the iShares Expanded Tech-Software ETF seeing its best monthly performance since October 2001, indicating a cooling of ‘SaaSpocalypse’ fears. Strong results from Snowflake and Okta, driven by their AI strategies and customer adoption of AI tools, were key drivers of this surge. Despite the recent gains, the software ETF is still trailing the Nasdaq for the year, though it has recovered significantly from earlier lows.

• Software stocks saw a significant rally, with the iShares Expanded Tech-Software ETF rising 8% this week and 21% in May.
• This rally is seen as a sign that some software companies are navigating AI disruption better than expected, easing fears of a ‘SaaSpocalypse’.
• Snowflake’s stock surged nearly 50% after announcing a $6 billion cloud and chip deal with Amazon and raising guidance, benefiting from customers needing to unify data for AI.
• Okta’s stock jumped a record 30% as investors favored its strategy of scaling identity security tools in response to agentic AI and bot armies.
• Other software companies like Atlassian, ServiceNow, Shopify, Workday, and Asana also saw notable gains.
• Oracle and Microsoft, which also sell cloud infrastructure, experienced increases, though Microsoft’s year-to-date performance is still negative.