Software stocks stage 'mini' bull market. Some traders see more gains

• The IGV software ETF has surged over 20% since April, though it remains down 12% year-to-date after earlier losses driven by 'SaaSpocalypse' concerns about AI disruption
• Bank of America analyst Tal Liani reinstated coverage of Microsoft with a buy rating and $130 price target, helping fuel Monday's optimism across the sector
• Cybersecurity stocks are outperforming the broader software category, with the Amplify cybersecurity ETF up 16% since April 20 as companies like Palo Alto Networks trade at all-time highs

Software Stocks Stage Mini Bull Market Rally

Key Developments

Software stocks are experiencing a significant recovery while semiconductor stocks retreat from Nasdaq-100 leadership. The iShares Expanded Tech-Software Sector ETF (IGV) has surged 20% from its April 20 lows, qualifying as a "mini" bull market, though it remains down 12% year-to-date.

Options Activity Signals Bullish Sentiment

Options traders are demonstrating strong confidence in the sector's recovery:

• Nearly 28,000 puts were sold on IGV during Monday's session, a bullish indicator
• Calls purchased outnumbered puts bought across the board
• ServiceNow (NOW) saw one of the day's largest options trades: a $32 million purchase of 7,000 call contracts (390-strike, expiring August 21)
• Eight of ServiceNow's top 10 options trades were call purchases

Analyst Upgrades and Company Performance

Bank of America analyst Tal Liani reinstated coverage of Microsoft (MSFT) with a buy rating and $130 price target, boosting sector optimism. Even struggling Salesforce (CRM), labeled "underperformed," rallied 3.5% with calls outpacing puts three-to-one.

Cybersecurity Outperforms

The cybersecurity subsector is a standout exception, with the Amplify Cybersecurity ETF (HACK) up 16% since April 20, including a 3% Monday gain. Several cybersecurity stocks are trading at all-time highs.

Market Context

The 2026 downturn in software stocks stems from "SaaSpocalypse" fears—concerns that AI agents will displace traditional software companies. The recent rally suggests traders believe the worst may be over for the battered sector.