The software sector staged a strong rebound last month, another sign of how investors flipped the script in the second half of the year.
Trading activity showed investors taking profits in high-flying chip stocks and rotating into beaten-down software names, as well as more defensive sectors such as energy and financials.
Workday emerged as the top software gainer in July, with a 31% rise, after a 16.3% drop in the prior month. Adobe rose 22.1%, Intuit rose 21.6%, Autodesk rose 20.4%, and Salesforce rose 17.5%, while heavyweight Microsoft rose 24.6%.
The iShares Expanded Tech-Software Sector ETF (IGV), which is heavily weighted towards software stocks, rose 4.4% last month, after a 10.7% drop in June. In the broader market, the Energy Select Sector SPDR Fund (XLE) and Financial Select Sector SPDR Fund (XLF) gained the most.
July marked a sharp turnaround for the software sector. For much of the year, investors had dumped software stocks amid a wave of new AI launches from companies such as Anthropic and OpenAI, fueled by concerns that those tools would erode demand for certain niche software products.
The biggest technology companies – Alphabet, Amazon, Apple and Microsoft – reported strong quarterly results, lifting sentiment across the broader tech sector.
A key bullish signal was the accelerating growth of cloud platforms such as Amazon Web Services, Microsoft Azure and Google Cloud, with cloud revenue widely viewed as a proxy for enterprise software spending. Google Cloud posted a record 82% sales growth in the latest quarter.
On Stocktwits, the retail sentiment was ‘bullish’ for WDAY, ‘neutral’ for ADSK, ADBE and INTU, ‘bearish’ for CRM, and ‘extremely bullish’ for MSFT.
Based on forward earnings, Microsoft is the most richly valued stock, trading at 24.2 times forward earnings, while Adobe is the cheapest at 9.7 times.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<
