Some of the most hated stocks in the S&P 500 in 2026 were among the most loved on Monday.

Enterprise software providers, many left behind in the artificial-intelligence boom, were the apparent beneficiaries of a pullback in chip and hardware stocks. It may not be a flash in the pan.

Workday, the human-resources software provider, was the top performer in the large-cap index on Monday, jumping 9.3%. The stock closed Friday down 37% this year.

Real-estate tech platform CoStar Group entered the day as the worst stock in the S&P 500 this year, down 59%. It surged 7.5% on Monday without a speck of news crossing investors' screens. Software stalwarts Salesforce (down 38% this year) and Intuit (down 55% in 2026) were also flying Monday, up 6.8% and 3.4%, respectively.

Altogether, the much-watched iShares Expanded Tech-Software Sector exchange-traded fund, or IGV, rose 4%, while the iShares Semiconductor ETF, or SOXX, slumped 3.1%.

The IGV and SOXX have often trended opposite directions, and the chip names have won out on most days. But Joshua Reilly, a software analyst at Needham, thinks investors may finally be open to buying the dip on software valuations.

"I believe that we have reached an inflection point where if you show stability in your trends, the multiples on these names are far below their historical averages and there's some re-rating going on," Reilly told Barron's.

The IGV now trades at about 25 times earnings over the next 12 months. A year ago, that multiple was around 35 to 40. Five years ago, at the height of the enterprise software boom, it was pushing 50.

Reilly pointed to RingCentral, the cloud communications platform, as an example of how earnings stability can make Wall Street rethink things. The company narrowly beat earnings expectations last Thursday, and the stock ripped 25% higher thanks largely to a rerated valuation.

Even some names that had poor or middling earnings last week, such as ServiceNow and Pegasystems, surged on Monday. That timing doesn't necessarily mean the mini-rotation is sustainable, said Rishi Jaluria, an analyst at RBC Capital Markets. However, it does suggest the move is "sector-wide versus investors trying to opportunistically buy names ahead of earnings."

The real test for the IGV will come after the closing bell on Wednesday, when Microsoft reports fiscal fourth-quarter earnings. The tech giant is the second-largest holding in the software ETF and a bellwether for enterprise tech spending.

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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July 27, 2026 13:39 ET (17:39 GMT)

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