Big Software Names Bounced Back in August. Can They Sustain Their Recent Rally?

Big Software Names Bounced Back in August. Can They Sustain Their Recent Rally?

Tue, September 1, 2026 at 6:04 PM GMT+3 2 min read

August was a good month for tech stocks, especially software companies that had slumped earlier in the year.

The iShares Expanded Tech-Software Sector ETF (IGV), America's largest software ETF, surged 16% last month, compared to the S&P 500's less than 3% gain over the same period. The State Street SPDR S&P Software and Services ETF (XSW), which hit an all-time high late last week, climbed nearly 15%.

Software giant Salesforce (CRM) was one of the big winners, with shares up about 40% in August. So was data analytics software maker Palantir (PLTR), with a more than 50% rise over the same period. Microsoft (MSFT) added 9%. The month's moves pulled Microsoft and Palantir into the green for the year, with Salesforce closing in on positive territory after taking a big hit earlier this summer.

A string of strong earnings have helped, chipping at some of the worries about AI disruption that had been holding the sector back. Palantir shares popped nearly 30% in a single session, the day after a blowout earnings report. Salesforce and Microsoft also saw a big boost after better-than-expected results.

Analysts at Jefferies told clients in a note over the weekend that they see the rally for software continuing into September. "We expect momentum to continue & believe AI displacement fears are overblown," they wrote.

More earnings from cybersecurity stocks this week could also add to recent optimism around the software sector. Palo Alto Networks (PANW) is set to report earnings after the closing bell Tuesday, with Zscaler (ZS) set to follow Thursday.

Wall Street analysts, who are widely bullish on Palo Alto Networks and Zscaler, have said they expect strong results, after rival CrowdStrike (CRWD) last week said it logged its best quarter ever.

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