Software Stocks Post Best Month Since 2001 as 'SaaS Apocalypse' Fears Ease

The iShares Expanded Tech-Software ETF (IGV) surged 21% in May 2026, marking its strongest monthly performance since October 2001, as concerns over AI disrupting the software industry subsided. The rally, capped by an 8% gain in the final week, was fueled by strong earnings from Snowflake and Okta that countered the "SaaS Apocalypse" narrative. Snowflake shares soared nearly 50% in the four-day trading week following a $6 billion cloud and chip partnership with Amazon and an upward revision to its full-year guidance driven by AI demand. Okta stock jumped 30% on May 29 after reporting that enterprises are rapidly investing in identity security to manage risks from agentic AI. The broader sector rallied, with Atlassian up 26%, ServiceNow gaining 20%, and Oracle climbing 16%, suggesting investors are reassessing the long-term value of software firms successfully integrating AI products into their growth paths.