Software Stocks Rebound 42% on AI Optimism as Microsoft Trails

As of June 3, the iShares expanded tech-software ETF has surged 42% from its April low and is now down just 2% year-to-date after an earlier 30% drop. The rally ignited on May 31 when Dell’s blowout results—revenue up 88% to $43.8 billion and AI-server sales jumping 757%—extended AI gains into enterprise software names including Datadog, Snowflake and Palo Alto Networks. Analysts now caution that sustaining the advance will require credible AI monetization and usage-based pricing, noting Microsoft remains roughly 9% below its 2026 highs despite being viewed as a diversified beneficiary.