By Piero Cingari
Publication Date: 2026-02-01 15:31:00
Software stocks are witnessing their worst month since the Lehman Brothers collapse.
Investors are now reassessing whether traditional business models can withstand the rapid advance of artificial intelligence. The iShares Expanded Tech-Software Sector ETF (NYSE:IGV) is on pace for its steepest monthly drop since October 2008.
The selloff intensified Thursday, when the sector plunged roughly 6% in a single session — its worst day since March 2020.
The move followed a collapse in Microsoft Corp. (NYSE:MSFT), which dropped more than 12% – the stock’s worst day since the lockdown shock.
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Indeed, Microsoft beat Wall Street expectations in its latest financial disclosure. But investors instead focused on slowing Azure cloud growth and cautious guidance. This is reigniting concerns about the pace and durability of AI monetization.
High-flying software names like Palantir Technologies Inc (NASDAQ:PLTR), Oracle Corp (NASDAQ:ORCL), AppLovin Corp