NEW YORK, Feb 6, 2026, 11:33 EST
U.S. software stocks bounced back Friday, boosting a key sector fund following several days of steep declines tied to rapid gains in artificial intelligence. The iShares Expanded Tech-Software ETF climbed roughly 2.4% to $81.59 in late morning trading.
The shift is significant as investors scramble to figure out whether AI will devalue some enterprise software or just reshuffle who gets paid. This debate has landed smack in the middle of earnings season and a broader retreat from crowded “AI trade” bets.
The broader market climbed as well, with the S&P 500-tracking SPY rising roughly 1.4%, the Nasdaq 100 tracker QQQ gaining about 1.5%, and the Dow ETF DIA advancing near 1.8%.
Stocks plunged the previous day, hit by weaker U.S. labor figures and concerns over the soaring costs tied to the AI surge, driving investors toward safer bets. Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted a shift as investors started to “turn more defensive” following Amazon’s announcement of a $200 billion spending plan for 2026 and Alphabet’s warning of capex reaching as much as $185 billion — funds aimed at long-term assets like data centers. Brian Levitt, Invesco’s chief global market strategist, described the market as “in a pocket” after a solid rally. 1
On Thursday, Anthropic, supported by Amazon and Alphabet’s Google, rolled out an upgraded AI model named Claude Opus 4.6. The company claims it can process much larger prompts — up to 1 million “tokens,” the chunks of text and code an AI ingests — and distribute tasks among autonomous agents via its Claude Code tool. Scott White, Anthropic’s head of product for enterprise, described Claude Cowork as “the front door to getting hard work done,” adding, “We are excited to partner and … get more value out of those tools.” 2
A MarketWatch analysis reported software stocks dropped for the eighth session in a row Thursday, with the iShares software ETF tumbling about 19% over that stretch and 102 of 114 components falling on the day. The piece also highlighted pressure on financial-data firms like FactSet and S&P Global. Gil Luria of D.A. Davidson noted that new AI tools “perform tasks that used to take people far longer to execute,” calling it “a concern for investors,” while pointing to Microsoft and ServiceNow as possible beneficiaries. 3
Motley Fool columnist Jeremy Bowman compared Alphabet’s situation to its “code red” moment back when OpenAI introduced ChatGPT in late 2022. He pointed out that Alphabet’s Bard launch in February 2023 stumbled with incorrect answers, triggering an 8% single-day stock drop. The shares then tripled after the company bounced back with Gemini. Bowman sees the current selloff as a reflection of valuation pressure on seat-based, software-as-a-service firms — SaaS meaning subscription software sold online, typically priced per user. 4
Alphabet shares fell roughly 3% on Friday, while Amazon dropped around 8%, dragging the sector lower despite a bounce in the broader market.
The risk runs both ways. If AI spending climbs without delivering clear returns, or if customers ditch per-seat licences quicker than firms can pivot, earnings might suffer and volatility could drag on.
