Software is breaking investors’ hearts — again.
One week after staging its sharpest rebound in nearly a year, the group is fading again. The iShares Expanded Tech-Software Sector ETF (IGV) is back in the red this week, and Adobe (ADBE) is reminding investors how quickly hope can disappear. The latest move looks less like a fresh start than another twist in the market’s AI scare trade.
That leaves investors with the perennial, if not existential, question in market timing: buy the dip, or sell the rip?
The bounce off the Feb. 23 low was real. IGV climbed about 15% from that low to its peak the prior Friday, and a long list of beaten-down names snapped higher with it. Cloudflare (NET), CrowdStrike (CRWD), Datadog (DDOG), Intuit (INTU), and Thomson Reuters (TRI) all posted double-digit gains from the trough.
But hope faded fast.
By Friday afternoon, only a handful of names in the group were positive on the week. Broad software and cloud ETFs had rolled back over. What looked promising at the end of last week started to feel, again, like a trade to rent rather than leadership to trust.
Software stocks had simply hit a technical wall.
IGV rallied hard off the February low, but that move ran straight into major resistance near 88 — a key Fibonacci retracement level and exactly the kind of area where shorts had reason to reload. They did. Strong leadership usually pushes through the first big test and forces skeptics to rethink the story. Software did not get there.
Adobe has become a stand-in for that frustration. The stock got hit hard Friday after earnings and a surprise CEO succession announcement — and is still down over 25% this year.
On a long-term chart, the damage goes back much further. ADBE peaked in late 2021, made another run that petered out in early 2024, and is now nearing 2019 levels again. Investors have been waiting a long time for a clean turn that has not arrived.
That helps explain why AI, for now, looks less like a tailwind for software than a new source of doubt.
Software companies can talk about copilots, productivity gains, and smarter workflows all they want. Investors want proof that AI can lift pricing, protect margins, and create new revenue — not just defend existing products. Until then, AI may be as much a valuation headwind as a growth story.
Lee Munson, president and chief investment officer at Portfolio Wealth Advisors, put it bluntly in a recent Yahoo Finance interview on the floor of the New York Stock Exchange. “Software multiples can go lower. And I think it’s dead money right now from a chart perspective.”
