Software joins AI rally

The AI stock rally is spreading from chipmakers into software names that spent the first months of 2026 getting sold off. (cnbc.com) CNBC reported April 19 that cybersecurity and enterprise software stocks “snapped a brutal losing streak” last week after investors spent much of the year favoring artificial intelligence infrastructure and semiconductor companies instead. Microsoft, one of the biggest software names in the market, had been down close to 20% for the year before jumping 13% last week. (cnbc.com) The move was broad enough to show up in sector funds. The iShares Expanded Tech-Software ETF rose nearly 14% in the week ended April 17, its best week since 2001, even though the fund was still down about 19% for 2026. (cnbc.com) That rebound followed a stretch when software stocks were treated as AI losers. CNBC said fears that tools from OpenAI and Anthropic could disrupt large parts of enterprise software had weighed on the group, while money rotated into companies selling chips, servers and other AI buildout gear. (cnbc.com) The shift does not mean investors stopped caring about AI hardware. It means they are starting to look for AI revenue in another layer of the stack: the software companies that sell cloud services, security tools and office products businesses already use every day. (cnbc.com) Microsoft sits in the middle of that argument because it sells both the computing backbone and the software on top of it. On January 28, Microsoft said quarterly revenue rose 17% to $81.3 billion, Azure and other cloud services revenue grew 39%, and Microsoft Cloud revenue topped $51.5 billion. (microsoft.com) Even with those numbers, investors had punished the stock earlier this year. After its January 28 earnings report, CNBC said Microsoft shares fell 7% in extended trading as cloud growth slowed from the prior quarter and management’s margin outlook came in light while capital spending on AI kept climbing. (cnbc.com) Microsoft also gave investors a concrete software-AI adoption number in that report. CNBC said the company had more than 15 million paid seats for Microsoft 365 Copilot, its artificial intelligence add-on for workplace software subscriptions. (cnbc.com) Other software and security baskets moved with it. CNBC reported the Global X Cybersecurity ETF was still down about 12% for the year but rose 12% last week, while the First Trust NASDAQ Cybersecurity ETF was down 6% for 2026 and up 9% over the same week. (cnbc.com) The question now is whether the April bounce turns into a longer rerating. CNBC noted that election years are volatile, valuations are “not necessarily cheap,” and a broader correction could still hit tech even as investors go bargain-hunting in software again. (cnbc.com)