Software stocks staged a powerful rally on Monday after Nvidia CEO Jensen Huang took aim at fears that artificial intelligence could decimate the software industry. The comments at the Computex conference in Taiwan ignited a fresh wave of buying that extended a sector rebound already underway.
ServiceNow (NOW) surged 10% in premarket trading, while IBM gained around 11% and Salesforce climbed more than 6%. The gains built on Friday's advance, when ServiceNow jumped over 14%, IBM rose more than 12%, and Salesforce added roughly 8.5%. Over the past month, ServiceNow has climbed about 36% and IBM around 28%, though many software stocks remain flat or negative for the year.
During his keynote, Huang directly challenged the bear thesis that agentic AI—systems that can perform tasks with minimal human input—would make traditional software obsolete. “A lot of people have said, ‘Jensen, AI is coming. Agentic AI is coming. Therefore, all of the software companies are going to go out of business.’ I said it's exactly the opposite,” Huang said. He argued that the proliferation of AI agents would instead increase demand for software tools, as more agents require more applications to function. He also dismissed warnings of mass layoffs, calling such concerns “complete nonsense” and noting that AI was actually driving higher hiring of software engineers.
The shift in sentiment is also lifting Microsoft (MSFT), which rose around 2% on the day. Huang unveiled the N1X processor, part of an Nvidia-Microsoft collaboration to produce a new generation of AI-powered Windows PCs. “Microsoft and Nvidia are going to reinvent the PC. This is the first completely re-engineered, reinvented line of PCs that has happened in 40 years,” Huang said, comparing the transformation to the smartphone revolution. The new systems are expected to launch this fall from Microsoft and major hardware partners including Dell, HP, ASUS, Lenovo, and MSI.
Analysts are growing more bullish on software names positioned to benefit from agentic AI. Bank of America reinstated ServiceNow with a Buy rating and a $130 price target, calling its workflow platform a potential “control tower” for autonomous AI agents. Barclays initiated IBM with an Overweight rating and a $350 target, citing its sticky enterprise customer base and software-driven profit growth. For Microsoft, Wells Fargo raised its price target to $650 (implying 44% upside) and Citizens JMP Securities initiated coverage with a $550 target, highlighting the company’s expansive enterprise AI opportunity—its total addressable market could swell from $1.8 trillion in 2025 to $5.1 trillion by 2030.
The recovery in the iShares Expanded Tech-Software Sector ETF (IGV), up roughly 17% over the past month despite a 4% year-to-date decline, signals that investors are beginning to price in AI as an opportunity rather than an existential threat for software firms.
