U.S. software sector rebound gains traction as AI lifts SaaS growth

Highlights

Snowflake, ServiceNow, Atlassian, and Salesforce reported quarterly revenue growth of 11% to 37%, all citing AI as a major driver.
AI is shifting from a perceived threat to a catalyst, as enterprise customers demand compliance, integration, and reliable performance from established software vendors enhancing AI capabilities.
Weiss Ratings spotlights the $14 billion iShares Expanded Tech-Software Sector ETF (IGV) with over 100 holdings and a 0.38% expense ratio as broad sector exposure.

Earnings point to stronger software demand

As reported by Weiss Ratings, recent quarterly updates from major software companies indicate that AI is supporting growth across the sector instead of displacing established vendors.

Snowflake reported quarterly revenue of $1.55 billion, up 35% from a year earlier, while product revenue rose 37%. The company also lifted its full-year outlook, and Chief Executive Sridhar Ramaswamy said AI accounted for roughly half of the recent growth acceleration, with its AI coding assistant drawing more than 9,000 accounts.

ServiceNow posted quarterly revenue of nearly $4 billion, up 24%, while subscription revenue increased 24.5% and its AI business surpassed $1 billion in annual contract value. Atlassian reported quarterly revenue of nearly $1.8 billion, up 28%, with cloud revenue rising 31% and remaining contracted business increasing 44%. Salesforce also delivered record quarterly results, with revenue of $11.3 billion, up 11%, earnings per share more than doubling, and annual recurring revenue from Agentforce and Data 360 reaching nearly $3.9 billion, up more than 210%.

AI shifts from threat to sector catalyst

The argument that AI-generated code would make traditional software vendors obsolete is weakening as large corporate customers continue to rely on secure, integrated and compliant platforms for core operations. For enterprises with complex systems, software still needs to connect across business functions, meet regulatory requirements and perform reliably at scale.

That is helping established providers preserve their role while adding AI capabilities into existing products. Salesforce is adding AI agents, ServiceNow is expanding workflow automation and Snowflake is positioning its platform around data use cases tied to AI, reinforcing the view that the technology is becoming an added source of revenue for the sector.

Weiss Ratings highlights the iShares Expanded Tech-Software Sector ETF, ticker IGV, as a broad way to gain exposure to the rebound. The fund, with about $14 billion in assets, holds more than 100 stocks, has an expense ratio of 0.38%, and keeps more than 95% of its portfolio in application and systems software, cloud computing and digital-media companies.

In our earlier coverage of Wipro’s quarterly revenue beat, we noted signs of steadier overseas client spending—particularly a pickup from European customers after a period of softer tech budgets. We also highlighted how AI-linked services are starting to generate new revenue streams for major Indian IT providers alongside traditional outsourcing work.

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