The iShares Expanded Tech-Software Sector ETF was up 5% on Monday. Oracle, a major component of the ETF, led the S&P 500's gainers Monday, soaring 12.7%.
Shares of software stocks snapped back on Monday, after what analysts believe was an indiscriminate selloff that stormed the market last week.
D.A. Davidson analyst Gil Luria told MarketWatch that investors returned to software on Monday after a "severe" selloff last week following Anthropic's release of a new artificial-intelligence model, Claude Mythos, spooked investors with its advanced ability to identify security vulnerabilities in software and apps.
Luria added that the market on Monday especially rewarded cloud-software companies, like Oracle $(ORCL)$, which have been particularly hurt by the AI threat this year.
The iShares Expanded Tech-Software Sector ETF $(IGV)$ surged 5.4% on Monday, its largest one-day gain since it soared 11.7% on April 9, 2025, according to Dow Jones Market Data.
The rally comes after the software ETF had slumped 7.2% over the previous three sessions to close Friday at its lowest price since November 2023, amid worries about the Mythos threat.
On Monday, shares of Oracle, the software ETF's second-most-influential component with a weighting of 8.3%, shot up 12.7%, their biggest gain in seven months and enough to lead the S&P 500's gainers. The rally added $50.4 billion to Oracle's market capitalization, which was $447.6 billion at Monday's close.
Even with Monday's rally, the stock has still dropped 20.2% in 2026.
Shares of Microsoft $(MSFT)$, first in the IGV with a 9% weighting, gained 3.6% on Monday.
Among other IGV heavyweights, Palantir Technologies's stock (PLTR) rose 3.4%, Salesforce shares (CRM) advanced 4.8%, Palo Alto Networks shares (PANW) gained 4.4%, CrowdStrike Holdings stock (CRWD) tacked on 6.1% and ServiceNow shares (NOW) rallied 7.3%.
Argus Research analyst Joseph Bonner told MarketWatch that investors were searching for bargains on Monday, and added that investors may be teasing out which companies may benefit from Anthropic's Mythos.
Geopolitical turmoil from the breakdown of U.S.-Iran negotiations and the blockade of the Strait of Hormuz was further playing into the lift on software stocks, according to Benchmark analyst Yi Fu Lee.
He told MarketWatch that cybersecurity stocks are especially benefiting from the war, given the increased threat of hacking from Iran-linked actors. The Amplify Cybersecurity ETF $(HACK)$ rose 4.4% on Monday.
Lee said cybersecurity companies CrowdStrike and Palo Alto Networks, which are two of the consortium of companies Anthropic is working with for the Mythos preview, stand to benefit from access to Mythos.
But investors shouldn't be too quick to view Monday's rally as a sign that software's downtrend was ending. Benchmark's Lee noted there are still uncertainties for the sector going forward.
"We don't have a crystal ball, because we're still at war," he said.
