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Software Stock Rally Signals AI Disruption Fears May Be Overblown

Software equities surged this week, with the iShares Expanded Tech-Software ETF climbing 8% and posting its best monthly gain since October 2001. The rally was fueled by strong earnings from Snowflake and Okta, both posting record trading days. Snowflake gained nearly 50% over four trading days following the holiday, announcing a $6 billion cloud and chip partnership with Amazon while raising guidance. CEO Sridhar Ramaswamy noted that customers are deploying and scaling workloads at accelerating rates. Despite year-to-date losses of 3.8%, the software ETF's rebound suggests Wall Street underestimated the sector's resilience amid AI disruption concerns. Many software firms continue generating growth by integrating their own AI offerings, positioning themselves as essential infrastructure for the broader technology transition.