The iShares Expanded Tech-Software ETF (NYSEMKT: IGV) is an exchange-traded fund (ETF) that holds over 100 different software stocks, including industry leaders like Palantir Technologies, Microsoft, and Salesforce. The ETF has suffered a decline of 11% this year amid concerns that artificial intelligence (AI) could disrupt the legacy software-as-a-service (SaaS) business model.
The potential risks are twofold. First, some investors think AI will shrink the global workforce, thus reducing the revenue of SaaS companies that charge customers on a per-user basis. Second, some investors fear AI-powered programming tools like Claude Code will allow businesses to create their own versions of popular software products, rendering legacy vendors obsolete.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
But the AI boom has recently run into trouble. Wall Street is questioning the sustainability of the data center infrastructure spending boom because the sheer cost of chips and other components is making AI models too expensive to deploy at scale in many cases. Here’s why that could be good news for the iShares Expanded Tech-Software ETF.
The AI trade just hit turbulence
Some of America’s top suppliers of AI data center chips have lost a substantial amount of value over the last few weeks. Nvidia stock is down 16% from its high, while Advanced Micro Devices stock has declined 21%, and Micron Technology stock has plummeted 33%.
The soaring cost of chips and components has forced AI providers like Anthropic to implement passive price increases on their customers, many of which are now rethinking their spending. Uber Technologies recently blew through its entire 2026 AI budget in four months by using Anthropic’s Claude Code, and its chief operating officer said it’s becoming harder to justify the current level of spending.
But Uber isn’t alone. Investment bank UBS Group recently conducted a survey that found 60% of businesses were routing tasks to cheaper, more efficient AI models to keep costs under control. Amazon and Walmart have even placed caps on AI usage for their employees to prevent budget blowouts.
And in a big, unexpected twist, a July 26 report by The Wall Street Journal suggested that large American companies have started hiring more human employees again, bucking predictions of an AI wipeout of the workforce. Simply put, it appears the AI wave that initially threatened the software industry is quickly losing momentum.
