TLDR
- Wedbush analyst Dan Ives called the software sector selloff the “most disconnected” trade he has seen in 15–20 years
- The iShares Expanded Tech-Software Sector ETF has dropped 19% this year, while the S&P 500 is down just 0.4%
- Ives says fears about AI disrupting traditional software companies are overblown
- He predicts 30% of AI spending will flow to established software platforms like Salesforce, ServiceNow, and Workday
- Ives pointed to recent Anthropic agent developments as a possible bottom signal for software stocks
Wedbush Securities analyst Dan Ives pushed back hard against the ongoing selloff in the software sector on Tuesday. Speaking at the Future Proof conference on CNBC, he called it the “most disconnected” technology trade he has seen in 15 to 20 years.
The iShares Expanded Tech-Software Sector ETF is down 19% so far this year. The S&P 500, by comparison, has dropped just 0.4% over the same period.
Ives blamed what he called an “AI ghost trade” for the damage. He said fears about artificial intelligence wiping out traditional software businesses have been greatly exaggerated by the market.
“It’s ultimately software that the use cases from Salesforce to ServiceNow to ultimately cybersecurity is gonna protect the CrowdStrike, Palo Alto and others,” Ives said during the interview.
He argued that the real value in AI sits inside established software platforms, not in newer pure-play AI companies. His view is that data and install bases built by companies like Salesforce, ServiceNow, Workday, and Oracle are the actual foundation of AI’s commercial future.
Why Ives Thinks Software Will Win the AI Race
Ives said he expects 30% of all AI spending to eventually flow toward software companies. He pointed to Palantir as an early example of how monetization in this space can work.
He also flagged recent developments from AI company Anthropic around its agents product as a potential signal that software stocks may be near a bottom.
“My whole point is that, yeah, is it gonna disrupt pure play software one trick pony, some vendors? But the reality is the data, the value, it’s in the stacks,” Ives said.
Ives also expects consolidation to pick up across the software sector as conditions remain pressured.
Market Sentiment and ETF Data
The iShares Expanded Tech-Software Sector ETF carries a market cap of roughly $10.88 billion. Its price-to-earnings ratio sits at 41.43, and its price-to-sales ratio is 20.24.
Technical indicators show the ETF’s 50-day moving average at 92.27, below its 200-day moving average of 105.22. That gap points to a bearish trend still in place.
The ETF has a beta of 1.3, meaning it moves more sharply than the broader market. Its volatility reading is 27.18.
Despite the selloff, its return on equity sits at 35.2% and its Altman Z-Score of 20.35 suggests the underlying companies remain financially stable.
Ives used a colorful analogy to sum up his view: “Right now, the Miami cab driver is bearish in software, and I think that’s a bullish sign relative to where I see software this year.”
The iShares Expanded Tech-Software Sector ETF has posted a three-year revenue growth rate of 18.97% and carries a gross margin of 74.37%.
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