ServiceNow and Salesforce shares climb as software stocks continue rebound

Investing.com -- U.S. software stocks are pushing higher in premarket trading on Tuesday, extending a potential recovery in a sector that has been under sustained pressure.

Investors have questioned whether artificial intelligence would erode the business models of traditional enterprise software companies.

ServiceNow leads the advance with a gain of 3.8%, following a more than 8% gain on Monday, while Workday has added 1.6%, Zscaler has risen 1.4% and Salesforce gained 1%. Intuit has climbed 1.4%, and the iShares Expanded Tech-Software Sector ETF, which tracks a broad basket of software names, has edged up 0.5%.

The moves suggest the sector may be finding its footing after a prolonged stretch of underperformance driven by concerns that large language models and AI-native applications could increasingly substitute for legacy software platforms.

While those questions have not disappeared, investors appear to be reassessing the degree to which the threat is priced in after a sharp drawdown.

The iShares software ETF has fallen 12.8% year to date, in stark contrast to the Philadelphia Semiconductor Index, which has surged 55% over the same period as chipmakers captured the lion's share of AI-related capital flows.

Whether the move marks a durable shift or a temporary bounce remains to be seen, with investors looking for evidence that software demand is holding up against the AI competitive threat.

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