Software stocks were beating chip makers on Friday with the iShares Expanded Tech-Software Sector ETF outpacing the VanEck Semiconductor ETF as Wall Street continued to rotate out of many high-flying artificial-intelligence names.
Tech stocks remained under pressure Friday, extending a recent slump, as shares of chip makers declined broadly. However software stocks dominated the top of the S&P 500 ndex Friday with ServiceNow, Workday, and Applovin all among the best performing components.
ServiceNow rose 7.2% while WorkDay and AppLovin advanced 5.6% and 5.3%, respectively. Palantir Technologies stock also gained 4.3% with the stock set to break its seven-day losing streak.
More broadly, the iShares Expanded Tech-Software Sector ETF rose 2.6% while the VanEck Semiconductor ETF declined 3.5%. The software ETF was outperforming the chips ETF by about 6%, according to Dow Jones Market Data.
Another sign of chip weakness, relative to software, was the the PHLX Semiconductor Index, a sector benchmark also referred to as the Philadelphia Semiconductor Index or SOX, that was falling 4.4%.
The top five performing stocks in the software ETF on Friday were Guidewire Software, BlackBerry, Intapp, ServiceNow, and Asana. All five stocks rose more than 6% on Friday, with BlackBerry adding to a 20% jump from Thursday following strong earnings.
On the flip side, the VanEck Semiconductor ETF was dragged lower on the back of substantial losses from Microchip Technology, Analog Devices, Monolithic Power Systems, Teradyne, and ON Semiconductor.
The ETF's worst performing stock was ON Semiconductor, which fell more than 20%, making it the S&P 500's worst performer in Friday's session. The big move lower came after the chip maker said late Thursday it had agreed to buy internet-of-things company Synaptics in an all-stock transaction with an enterprise value of about $7 billion.
Software stocks outperforming chips on Friday is notable because for the majority of 2026 the inverse has been true. With AI driving up demand for chip processors, semiconductor stocks have been rallying at historic levels. However, the AI thesis for software plays is less favorable, with the overwhelming sentiment being that AI will disrupt software, rendering some offerings obsolete.
Investors will have to wait to see if the current market rotation changes this narrative in any meaningful way.
Write to Kit Norton at kit.norton@barrons.com
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(END) Dow Jones Newswires
June 26, 2026 11:51 ET (15:51 GMT)
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