Retail Investors Fuel Record Buying in U.S. Software ETF as AI Trade Broadens

Retail investors fueled record-breaking activity in a U.S. software exchange-traded fund (ETF) on Monday, according to data from Vanda Research. The iShares Expanded Tech-Software Sector ETF experienced its largest single-day buy-in by individual investors on record.

Mom-and-pop traders purchased a net $46 million worth of stock in the ETF, significantly exceeding the previous single-day record by approximately 40 percent. This surge follows a previous record set in early February when retail traders bought a net $32.8 million. Vanda Research noted that the AI and semiconductor trade is showing early signs of broadening, with software emerging as a primary beneficiary.

Several major software companies saw significant rallies, including ServiceNow, International Business Machines, Adobe, Atlassian, Salesforce, and Workday, which each gained between 7.5 percent and 9.6 percent in the last session. Consequently, the iShares Expanded Tech-Software Sector ETF jumped 5.9 percent, reaching a five-month high.

However, investor concerns about AI's disruptive potential, particularly after Anthropic launched new automated task tools in February, continue to linger. These tools raised worries about potential pressure on traditional software businesses. The recent rally showed signs of faltering on Tuesday, with the software ETF dipping 3.1 percent, and Intuit and Workday among the S&P 500's biggest decliners in early trading. Despite Tuesday's losses, the software ETF remains down over 1 percent year-to-date.

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The AI/semi trade is showing early signs of broadening out from a flows perspective. Software is emerging as one of the initial beneficiaries.