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iShares Expanded Tech-Software Sector ETF

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Short bets in software plateau, tension grows in stocks such as UiPath

by Chief Editor
written by Chief Editor

Software Sector’s Shifting Sands: Why Short Sellers Are Still Watching

After a challenging start to the year, the software sector is seeing a slight reprieve, but don’t mistake this for a full recovery. While broad short-selling wagers are easing, a keen focus remains on specific companies perceived as vulnerable. According to S3 Partners data, short interest in the S&P 1500 Software Index peaked on February 26th and has since edged lower, coinciding with a cooling of the sector’s 23% year-to-date decline.

The AI Factor: A Looming Threat to Traditional Software?

The underlying concern driving this cautious sentiment isn’t simply market volatility; it’s the potential disruption from artificial intelligence, and automation. Investors are questioning whether the steady growth traditionally associated with software subscriptions will hold as AI-powered alternatives emerge. This reevaluation of long-term revenue potential is prompting a more selective approach from both investors and short sellers.

“The biggest thing for me is that the shorts still have conviction,” explains Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. He notes that short sellers aren’t necessarily increasing their positions dramatically, but they aren’t abandoning them either, suggesting a continued belief in potential downside.

UiPath: A “Battleground” Stock

UiPath has become a focal point for this bearish sentiment, experiencing a 4 percentage point increase in short interest over the past month, reaching 26.2% of its float. S3 Partners now classifies the stock as being in “battleground” territory, where the balance between long and short positions is increasingly tight – 139 million shares held long versus 107 million shares short.

Pro Tip: A “battleground” stock often indicates high volatility and potential for significant price swings, making it a riskier investment.

Beyond UiPath: Other Companies Under Scrutiny

UiPath isn’t alone. Sprinklr, Dropbox, and Workday have also seen notable increases in short interest, signaling that investors are actively identifying companies with perceived weaknesses. This isn’t a blanket condemnation of the entire software sector, but rather a targeted approach focusing on specific vulnerabilities.

What Does This Imply for Investors?

The stabilization of aggregate sector positioning doesn’t necessarily translate to a safe haven for all software stocks. Investors should carefully assess the potential impact of AI and automation on individual companies’ business models. Companies heavily reliant on traditional software licenses may face greater challenges than those embracing or integrating AI technologies.

Did you know? Short interest as a percentage of float can be a useful indicator of market sentiment, but it’s not a foolproof predictor of future price movements.

Looking Ahead: A More Selective Market

The current environment suggests a shift towards a more discerning market. Investors are no longer willing to pay a premium for growth at any cost. They are demanding evidence of sustainable competitive advantages and a clear path to profitability. This increased scrutiny will likely continue to drive volatility in the software sector, particularly for companies facing disruption from emerging technologies.

FAQ

Q: What is short interest?
A: Short interest represents the number of shares that have been sold short but not yet covered or closed out. It’s an indicator of bearish sentiment.

Q: What does it mean when a stock is in “battleground” territory?
A: It means the number of shares sold short is close to the number of shares held long, indicating a high degree of uncertainty and potential for significant price swings.

Q: How does AI impact the software sector?
A: AI and automation tools could potentially erode demand for traditional software licenses and workflows, forcing companies to adapt or risk losing market share.

Q: Where can I find more information on S&P 1500 Software Index?
A: You can find historical data and information on the S&P 1500 Software Industry Index on MarketWatch.

Q: What is the current state of the S&P 1500?
A: As of March 25, 2026, the S&P Composite 1500 is at 1,474.13. See more details on Yahoo Finance.

Stay informed about the evolving dynamics of the software sector. Explore our other articles on technology trends and investment strategies to make informed decisions.

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Tech

Some software names hit by AI deserve a valuation cut

by Chief Editor
written by Chief Editor

AI’s Impact: Software Valuations Under Scrutiny

The artificial intelligence revolution is rapidly reshaping the software landscape, leading to a critical reassessment of valuations. Orlando Bravo, co-founder of Thoma Bravo, recently stated that some software companies facing disruption from AI are experiencing “very warranted” decreases in their valuations. This comes as AI model companies release tools that threaten to replace existing software services at a lower cost, impacting the entire industry.

The Disruption is Already Here

Bravo emphasized that many companies currently being disrupted by AI were already facing underlying challenges. The rise of AI is simply accelerating the inevitable for some, while others are being unfairly penalized in the market downturn. The iShares Expanded Tech-Software Sector ETF (IGV) has fallen roughly 28% from its peak in September, illustrating the broad market correction.

Thoma Bravo’s Own Lessons Learned

Acknowledging past missteps, Bravo admitted that Thoma Bravo overestimated growth rates during its $6.4 billion acquisition of Medallia in 2021, leading to an overpayment. This candid admission highlights the challenges of accurately forecasting growth in a rapidly evolving technological environment.

Winners and Losers in the AI Era

Despite the overall market turbulence, Bravo believes some software companies are being unduly punished and are poised to thrive in the “agentic era.” These “phenomenal businesses” possess characteristics that allow them to leverage AI effectively, but he did not specify which companies he believes fall into this category.

Apollo’s Critique of Private Equity Valuations

The scrutiny of software valuations extends beyond Thoma Bravo. Apollo Global Management President John Zito recently criticized “arrogance” in software valuations within the private equity sector, specifically referencing the Medallia acquisition. This suggests a broader industry-wide reckoning regarding pricing and expectations.

The Future of Software Investment

Bravo’s comments align with a growing sentiment that AI valuations are currently in a bubble, reminiscent of the dot-com era. While AI presents immense opportunities, investors are becoming more discerning, focusing on companies with strong fundamentals and a clear path to profitability.

AI Boosts Developer Productivity

Interestingly, a recent discussion between Orlando Bravo and IBM CEO Arvind Krishna highlighted the positive impact of AI on software development. Krishna shared that AI is boosting developer productivity, expanding entry-level hiring opportunities, and unlocking billions in back-office automation. IBM has reinvested savings from automation into software R&D and growth.

FAQ

Q: Is AI a threat to all software companies?
A: No, AI will disrupt some companies more than others. Those with deep domain expertise and the ability to integrate AI effectively are more likely to succeed.

Q: What is an “agentic era”?
A: The “agentic era” refers to a future where AI agents are layered on top of existing systems, automating tasks and providing intelligent assistance.

Q: Did Thoma Bravo make a mistake with the Medallia acquisition?
A: Yes, Orlando Bravo acknowledged that Thoma Bravo overestimated Medallia’s growth potential and paid too much for the company.

Q: Are software stocks currently oversold?
A: Orlando Bravo believes some software stocks are oversold, while others are experiencing justified valuation corrections.

Pro Tip: Focus on software companies with strong domain expertise and a clear strategy for integrating AI into their offerings. These are the businesses most likely to thrive in the long run.

What are your thoughts on the impact of AI on the software industry? Share your insights in the comments below!

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Entertainment

A tech patent licensor could make another push higher, charts show

by Chief Editor
written by Chief Editor

InterDigital: A Patent Powerhouse Poised for Growth?

Investors are increasingly turning their attention to InterDigital (IDCC), a company that operates in a unique space – patent licensing for wireless and video technologies like 5G and Wi-Fi. Unlike many tech firms, InterDigital doesn’t manufacture physical products; it generates revenue by collecting royalties from device makers. This business model has recently caught the eye of analysts, despite broader underperformance in the growth stock sector.

Navigating a Recent Downturn

Early 2026 saw a near-30% decline in InterDigital’s stock price. However, the company has demonstrated resilience, stabilizing and forming what technical analysts describe as a bullish inverse head-and-shoulders pattern. This pattern suggests a potential breakout, with an estimated upside target of around 20%, potentially reaching $462 per share – significantly above its October 2025 high.

Understanding the Technical Setup

The inverse head-and-shoulders pattern is a key indicator. It requires a sustained advance to clear the breakout zone, which can be challenging given the rising resistance line. However, if InterDigital maintains its position above $343 – the low of the pattern’s right shoulder – the technical outlook remains positive. This level too serves as a crucial stop-loss point for investors.

Pro Tip: Always set stop-loss orders when trading based on technical patterns. This helps limit potential losses if the pattern fails to materialize.

A History of Successful Breakouts

Looking at a three-year chart, InterDigital has consistently leveraged similar bullish formations. While these setups may not always be dramatic, they often involve months of price action, culminating in breakouts with significant follow-through. The stock has repeatedly exceeded its measured-move targets, demonstrating a pattern of capitalizing on technical characteristics.

The Role of Moving Averages and RSI

Analysis of weekly moving averages (13-week, 26-week, and 40-week) reveals that InterDigital often finds support near the cluster formed by these lines during pullbacks. The 14-week Relative Strength Index (RSI) also plays a role, frequently bottoming out when it approaches the midpoint of its range. Currently, the RSI is above 50, indicating potential for further upside if the stock breaks out.

Historically, rallies have often pushed the RSI into overbought territory, sometimes for extended periods. This suggests that InterDigital has the potential for substantial gains if it follows a similar trajectory.

IGV ETF Connection

InterDigital is a component of the iShares Expanded Tech-Software Sector ETF (IGV). While initially misclassified by some as a semiconductor company, it’s fundamentally a patent licensing firm. The IGV ETF seeks to track the investment results of North American equities in the software industry and related sectors. As of March 11, 2026, IGV was trading at $85.74.

Frequently Asked Questions

What does InterDigital actually do?
InterDigital invents wireless and video technologies and licenses its patents to device manufacturers, collecting royalties without producing hardware.
What is the potential upside for InterDigital?
Analysts estimate a potential upside of roughly 20%, with a target price near $462 per share.
What is the key support level for InterDigital?
The key support level is $343, which also serves as a stop-loss point.
What is the IGV ETF?
The iShares Expanded Tech-Software Sector ETF (IGV) is an exchange-traded fund that tracks companies in the software and related industries.

Did you realize? InterDigital’s business model allows it to profit from technological advancements without the capital-intensive process of manufacturing physical products.

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Entertainment

These stocks are the most at risk from AI disruption

by Chief Editor
written by Chief Editor

AI Disruption: Which Stocks Are Most Vulnerable?

U.S. Stocks are facing a period of uncertainty as the rapid development of artificial intelligence models threatens to upend established business models. A recent analysis by Jefferies identifies 150 companies with market caps exceeding $1 billion that are at significant risk from AI-driven disruption. The software sector, in particular, is feeling the pressure, with the iShares Expanded Tech-Software Sector ETF (IGV) down over 23% this year.

The “AI Paradox” and Market Reaction

The current market downturn isn’t necessarily a sign of fundamental weakness in all tech companies, but rather a reaction to the potential for AI to reshape industries. Investors are grappling with the “AI paradox” – the idea that whereas AI offers immense potential, it also introduces significant risks to existing revenue streams and competitive advantages. This has led to a sell-off in software-as-a-service providers, insurance services, logistics, and real estate stocks.

How Jefferies Assessed AI Risk

Jefferies developed an “AI risk” assessment model, combining return profiles with an AI-assisted search algorithm, to pinpoint vulnerable stocks. The analysis focused on potential threats like asset repricing, demand substitution, labor substitution, moat decay, and pricing pressure. The firm identified sub-industries most susceptible to disruption and then used pre-trained prompts to assess stock-specific risks.

Stocks Facing Significant AI Risk

Several prominent companies have been flagged as particularly vulnerable:

  • Unity Software: AI-generated content could lower switching costs for developers, diminishing the appeal of Unity’s ecosystem. Unity’s stock has plummeted 59% in 2026.
  • Datadog, MongoDB, and ServiceNow: These software companies are also facing disruption fears.
  • MongoDB: AI coding tools could weaken the necessitate for specific database architectures, reducing customer loyalty.
  • Duolingo: The language learning platform faces competition from AI tutors, potentially commoditizing language education. Shares have fallen 42% this year.
  • Robinhood: AI agents could disintermediate retail trading, impacting Robinhood’s business model. The stock is down 33% year-to-date.
  • Accenture and DoorDash: These companies are also included in Jefferies’ risk basket.

Beyond Software: Broader Implications

The impact of AI extends beyond the software sector. The potential for labor substitution, for example, could affect a wide range of industries. Asset repricing and demand substitution are also concerns across multiple sectors. While the software sector currently trades at a similar PE ratio (21x) to the broader market, Jefferies suggests it could trade at a discount given the uncertainties surrounding AI’s impact.

AI is Already Making Money

Despite concerns about profitability, Brent Thill of Jefferies notes that AI is already generating revenue. The backlog of contract signings across major tech vendors is $700 billion, exceeding capital expenditures by over 200%. Microsoft has demonstrated the ability to expand operating margins while investing in AI, suggesting pricing power and positive economic output.

Frequently Asked Questions

Q: Is AI really a threat to jobs?
Currently, AI is primarily augmenting jobs rather than replacing them. However, long-term job losses are anticipated.

Q: Which sectors are most vulnerable to AI disruption?
Software-as-a-service, insurance, logistics, and real estate are currently facing significant disruption risks.

Q: Is it too late to invest in AI?
No, experts believe AI is still in its early stages, and there are opportunities to invest across the entire AI value chain.

Q: What is the “AI Paradox”?
The “AI Paradox” refers to the simultaneous potential and risk that AI presents to businesses and investors.

Did you understand? The AI market size is expected to reach over $4 trillion by 2033, a 25x increase from $189 billion in 2023.

Pro Tip: Diversifying your portfolio across the AI value chain, rather than focusing solely on “Magnificent 7” tech companies, could offer a broader and more resilient approach to investing in AI.

Stay informed about the evolving landscape of AI and its impact on the market. Explore more articles on technology and investment strategies to create informed decisions.

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3 themes that drove Wall Street’s wild week and the new U.S.-Iran conflict wildcard

by Chief Editor
written by Chief Editor

Market Turmoil: AI, Geopolitical Risk, and the Investor Landscape

Stocks experienced significant volatility last week as investors grappled with the dual forces of artificial intelligence disruption and escalating geopolitical tensions. The situation intensified following U.S. And Israeli strikes on Iran, with President Trump calling for regime change. This comes on the heels of ongoing concerns about AI’s impact on the economy, adding another layer of uncertainty to the market.

The Iran Conflict and Oil Price Shocks

The recent military actions in Iran have sent shockwaves through global markets, particularly impacting oil prices. Concerns about potential disruptions to crude supply from the Middle East led to a surge in prices on Friday. This geopolitical risk is compounding existing anxieties about economic stability.

AI Disruption: Job Losses and Sector Rotation

Fears surrounding AI-driven job losses continue to weigh on investor sentiment. A recent report highlighted the potential for significant white-collar unemployment by 2028, triggering a sell-off in financial stocks. This has led to a rotation away from high-growth chip stocks towards more defensive sectors like enterprise software, though even that sector is facing disruption.

Fintech firm Block’s recent layoffs, cutting nearly half its workforce, further fueled these concerns. The S&P 500 and Nasdaq both experienced their worst monthly losses since March 2025 in February, declining nearly 1% and 3.4% respectively.

Chipmakers Under Pressure, AI Industrials Rise

Despite strong quarterly results, Nvidia shares fell sharply last week, reflecting a broader market correction in the chip sector. Broadcom followed suit, indicating a shift in investor preference. Conversely, companies benefiting from the infrastructure supporting AI, such as Corning (fiber optic cables) and Qnity Electronics (materials for AI chips), saw significant gains. Qnity Electronics, boosted by a strong earnings report following its split from DuPont, was the biggest weekly portfolio winner.

Pro Tip: Pay attention to companies enabling the AI revolution, not just those directly developing AI technologies. The supporting infrastructure is poised for substantial growth.

Software Sector Swings and Cybersecurity Concerns

Salesforce experienced a rebound following a period of underperformance, aided by better-than-expected earnings and positive commentary on its AI-powered Agentforce platform. However, concerns remain about the long-term impact of AI on Salesforce’s traditional software-as-a-service model. Cybersecurity firms CrowdStrike and Palo Alto Networks faced headwinds after Anthropic announced a latest cybersecurity tool, raising competition concerns.

Financials Face Headwinds

The viral research report predicting widespread white-collar job losses due to AI adoption set pressure on financial stocks. Capital One, Wells Fargo, and Goldman Sachs all declined following the report’s publication. However, some investors viewed the weakness as a buying opportunity.

Did you know? The market often overreacts to initial reports, creating opportunities for long-term investors.

The Trump-Anthropic Conflict: A New Layer of Risk

President Trump’s recent directive to U.S. Government agencies to cease using Anthropic’s AI tools, coupled with the designation of the company as a national security threat, adds another layer of complexity to the AI landscape. This stems from Anthropic’s refusal to grant the military unbridled access to its technology. This action highlights the growing tension between AI innovation and national security concerns.

Looking Ahead: Key Earnings and Data Releases

Investors will be closely watching Broadcom’s earnings report this week. CrowdStrike’s earnings release is also on the horizon. Key economic data, such as the producer price index, will continue to influence market sentiment.

Frequently Asked Questions

  • What is driving the recent market volatility? The primary drivers are concerns about AI-driven job losses and escalating geopolitical tensions, particularly related to the conflict in Iran.
  • Which sectors are currently favored by investors? AI infrastructure companies are currently favored, while chipmakers are facing headwinds.
  • What is the significance of the Trump-Anthropic conflict? It highlights the growing tension between AI innovation and national security concerns, and could impact the broader AI industry.
  • How are oil prices being affected? Oil prices have surged due to concerns about potential supply disruptions from the Middle East.

Explore more articles on market analysis and AI investing to stay informed about the latest trends. Subscribe to our newsletter for regular updates and expert insights.

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Tech

What I saw at India’s AI summit

by Chief Editor
written by Chief Editor

India’s AI Ambitions: Navigating Chaos and Capturing Opportunity

New Delhi recently played host to a major artificial intelligence summit, an event intended to showcase India’s growing prominence in the AI landscape. However, the summit was marked by organizational challenges, from logistical nightmares to security concerns and even controversies surrounding keynote speakers and showcased technology. Despite the turbulence, the event underscored the immense potential – and the intense competition – surrounding India’s AI future.

A Summit Riddled with Challenges

Reports from the AI Impact Summit detailed significant difficulties. Media access was initially unclear, leading to confusion and delays. Delegates voiced frustrations with the event’s organization. A university faced public criticism after presenting a robot dog as its own creation when it was, in fact, manufactured by a Chinese firm, Unitree. The university later clarified that the robot was used for AI programming education. Even a planned address by Bill Gates was thrown into uncertainty due to his connection to the Epstein files, ultimately resulting in his withdrawal.

Indian IT minister Ashwini Vaishnaw acknowledged the “problems” experienced on the first day, signaling an awareness of the issues.

The Viral Handshake (or Lack Thereof)

A seemingly minor moment – a lack of a coordinated handshake during a group photo with Prime Minister Narendra Modi – sparked considerable online discussion. OpenAI CEO Sam Altman and Anthropic CEO Dario Amodei did not join the hand-holding gesture, a moment interpreted by some as a reflection of the rivalry between the two AI companies. This followed an Anthropic Super Bowl ad that took aim at OpenAI’s advertising practices within ChatGPT.

Why India Matters to Big Tech

Despite the summit’s hiccups, major tech players remain deeply interested in India. OpenAI CEO Sam Altman emphasized the “incredible excitement” surrounding India’s AI development. Google CEO Sundar Pichai as well highlighted India’s advantages, including its large talent pool and consumer market. These companies are actively forging partnerships and making investments to capitalize on India’s potential.

OpenAI announced it would be the first customer of Tata Consultancy Services’ data center business, while Google unveiled collaborations with Indian researchers and educational institutions for its Gemini AI feature. The Indian government aims to attract $200 billion in AI investment over the next two years.

India’s 100 Million ChatGPT Users and Future Growth

The scale of India’s AI adoption is already significant. Sam Altman revealed that India has 100 million weekly active ChatGPT users, demonstrating a substantial and growing demand for AI-powered tools. This large user base, combined with a burgeoning tech sector, positions India as a critical market for AI innovation and deployment.

The Rise of Chinese Tech in the Indian Market

While the focus is often on US tech giants, the incident with the robot dog highlights the growing presence of Chinese technology in India. This underscores a broader trend of increasing competition from Chinese companies in the AI space, potentially influencing the dynamics of the Indian market.

Looking Ahead: Trends to Watch

Several key trends are likely to shape India’s AI landscape in the coming years:

  • Increased Investment: Expect continued investment from both domestic and international players as India strives to become an AI hub.
  • Talent Development: Focus on building a skilled AI workforce will be crucial, with universities and training programs playing a vital role.
  • Data Privacy and Regulation: As AI adoption grows, robust data privacy regulations and ethical guidelines will become increasingly important.
  • AI-Powered Solutions for Local Challenges: AI is likely to be applied to address specific Indian challenges in areas such as agriculture, healthcare, and education.
  • Competition from Chinese Firms: The presence of Chinese tech companies will continue to grow, creating a more competitive market.

FAQ

Q: What were the main challenges at the AI Impact Summit?

A: The summit faced issues with logistics, security, media access, and controversies surrounding speakers and showcased technology.

Q: How many ChatGPT users are in India?

A: India has 100 million weekly active ChatGPT users.

Q: What is the Indian government’s goal for AI investment?

A: The government aims to attract $200 billion in AI investment over the next two years.

Pro Tip: Keep an eye on partnerships between Indian companies and global tech giants. These collaborations will be key drivers of AI innovation in the region.

What are your thoughts on India’s AI future? Share your insights in the comments below!

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