Software Stocks Lead S&P 500 as ServiceNow Surges 7.2% While Chip ETF Drops 3.5%
N.R. Finch
A rare intra-tech split emerged Friday — the software ETF rose 2.6% while the semiconductor ETF fell 3.5%, a gap of roughly 6 percentage points and the widest software-over-chips outperformance in recent memory, signaling a rotation from hardware capex plays into application software.
Which software names led the rally?
Software stocks dominated the S&P 500 leaderboard: ServiceNow +7.2%, Workday +5.6%, AppLovin +5.3%.
Palantir rose 4.3%, snapping a seven-session losing streak.
The top five gainers in the software ETF — Guidewire Software, BlackBerry, Intapp, ServiceNow, and Asana — each climbed more than 6%. BlackBerry extended the 20% surge triggered by strong earnings on Thursday.
Why did chip stocks sell off?
The Philadelphia Semiconductor Index (SOX) dropped 4.4%; the VanEck Semiconductor ETF fell 3.5%.
The biggest loser was ON Semiconductor, down more than 20% — the worst performer in the entire S&P 500 on the day.
This means → ON Semi's plunge had a clear catalyst: a Thursday after-hours announcement of an all-stock acquisition of IoT company Synaptics at an enterprise value of roughly $7 billion, raising concerns about capital allocation.
Microchip Technology, Analog Devices, Monolithic Power Systems, and Teradyne also posted sharp declines.
What does a 6-point gap tell us?
The iShares Expanded Tech-Software ETF gained 2.6% while the VanEck Semiconductor ETF lost 3.5%. Per Dow Jones Market Data, software's margin of outperformance was unusually wide.
In plain terms = on a single day, within the same broad tech sector, money flowed decisively from "the companies that make chips" to "the companies that write software."
This reflects a one-day sentiment shift, not yet a trend reversal. For most of 2026, AI compute demand has powered semiconductor strength while fears of AI disruption weighed on software valuations.
Whether this rotation reshapes the full-year narrative remains to be seen.
Content is for reference only, not financial advice.