Software Stocks Jump Over 20% on Q2 Earnings and AI Revenue as 15% Rebound Gains Steam
Updated
Updated · Morningstar · Aug 17
Software Stocks Jump Over 20% on Q2 Earnings and AI Revenue as 15% Rebound Gains Steam
3 articles · Updated · Morningstar · Aug 17
Summary
Several software stocks have climbed more than 20% since reporting second-quarter results, helping the Morningstar US Software Application Index rebound 15% since July 22 after a roughly 27% slide from October through mid-July.
Strong earnings, early AI revenue and better margins are driving the move, while analysts say investors are also reversing an earlier view that AI would crush software business models and recognizing the sector had become oversold.
The rebound has been uneven: HubSpot sank 22% after trimming revenue guidance by $6 million, while Figma fell 13% after earnings despite accelerating revenue, with analysts attributing that drop largely to profit-taking after a 67% run-up.
Attention now shifts to major retailer earnings this week, where Walmart, Home Depot and Target will test whether higher fuel costs are widening the gap between higher- and lower-income consumers.
AI's market boost may also be feeding inflation near term: July core goods rose 0.20% month over month, with IT commodities up 1.4% as business AI demand lifted costs for computers, software and smartphones.