U.S. technology markets are seeing a renewed boost in software stocks as investors increasingly view artificial intelligence as a growth opportunity rather than an immediate threat to traditional software companies.

The S&P 500 software and services index climbed 1.3% on Tuesday, reaching its highest level since November 2025. The sector also recorded its strongest quarterly gain since 2020 during the July–September period.

Companies including Salesforce, ServiceNow and Accenture have reported strong results, while partnerships with AI companies are helping traditional software providers adapt to the rapidly changing technology landscape. Cybersecurity companies such as CrowdStrike, Fortinet and Palo Alto Networks have also benefited from rising demand for protection against AI-powered threats.

The sector's expected 2026 earnings growth has risen to 20.6%, compared with 13.8% in March, according to LSEG data. Analysts say earlier fears of a "SaaSpocalypse"—where businesses would replace commercial software with internally built AI applications—have so far been overstated.

However, analysts warn that AI-driven coding and expanding data-center capacity could create greater competitive pressure on software companies in 2027.