Software Stocks Struggle to Regain Investor Trust

Investors remain skeptical despite recent rebound attempts in the software sector

Mar. 15, 2026 at 2:36pm

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Software stocks have seen a volatile few weeks, with a sharp rebound last week followed by another pullback. Investors are hesitant to trust the sector, as software companies have yet to prove that AI can meaningfully boost their business metrics like pricing, margins, and revenue growth. Until software firms can demonstrate tangible benefits from AI, the group may continue to be viewed as "dead money" by some investors.

Why it matters

The software sector is a bellwether for the broader technology industry, and its performance is closely watched by investors. The ongoing uncertainty around the impact of AI on software companies' fundamentals is contributing to volatility and a lack of conviction in the group. This dynamic reflects broader questions about the near-term benefits of AI across the tech landscape.

The details

After staging a roughly 15% rebound from a February low, the iShares Expanded Tech-Software Sector ETF (IGV) has pulled back again this week, highlighting the fragility of the software sector's recovery attempts. Prominent names like Adobe have continued to struggle, with the stock down over 25% so far this year. Investors are looking for software companies to prove that AI can drive meaningful improvements to their business, rather than just serving as a talking point. Until software firms can demonstrate the tangible benefits of AI, the group may remain in a trading range rather than establishing a sustainable recovery.

  • The software sector staged a sharp rebound of around 15% from a February 23 low.
  • The rebound peaked the prior Friday before fading again by this past Friday.

The players

iShares Expanded Tech-Software Sector ETF (IGV)

An exchange-traded fund that tracks the performance of the software industry.

Adobe (ADBE)

A major software company that has struggled, with its stock down over 25% so far in 2023.

Lee Munson

The president and chief investment officer at Portfolio Wealth Advisors, who commented on the software sector's challenges.

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What they’re saying

“Software multiples can go lower. And I think it's dead money right now from a chart perspective.”

— Lee Munson, President and Chief Investment Officer, Portfolio Wealth Advisors

What’s next

Investors will be closely watching for any signs that software companies are able to demonstrate tangible business benefits from AI, which could help restore confidence in the sector and drive a more sustainable recovery.

The takeaway

The software sector's struggle to regain investor trust highlights the broader uncertainty around the near-term impact of AI on technology companies' fundamentals. Until software firms can prove AI is boosting their pricing, margins, and revenue growth, the group may continue to be viewed as a trading opportunity rather than a long-term investment.