Jensen Huang, the CEO of Nvidia, has brought about significant changes in technology. He believes software equities are currently underestimated during a serious sell-off. In a CNBC interview after Nvidia’s strong fourth-quarter earnings where revenue increased 75% to $68.13 billion, he made scathing remarks. These comments changed market sentiment, triggering a mass exodus from semiconductor holdings to software-as-a-service (SaaS) metrics. As a result, software names were on a strong upswing on Thursday.
The Sell-Off Storm
Stocks of software companies have dropped to bear-market levels this calendar year, falling over 20% since pre-pandemic highs. This decline comes from worries about artificial intelligence disruption. Efforts like the Claude Code of Anthropic threaten a market valuation of approximately 11 trillion and even affect big players.
The iShares Expanded Tech-Software ETF (IGV) is down 31% since the high. It trades at $82.60 as of 26 February, having fallen 2.17% year-to-year, with total losses nearly 24%. Microsoft (MSFT), despite fourth-quarter CY2025 revenue exceeding estimates at 81.272 billion a year-on-year rise of 16.7, suffered a 28% drop from its all-time high. This high is currently about 401, and the stock’s price-to-earnings ratio is around 25, which is lower than the S and P 500 average.
Huang’s Wake-Up Call
In a CNBC interview, Huang said markets did not fully understand the situation. He argued that AI agents will augment, not replace, current utilities like Microsoft Excel. Therefore, software companies can use agentic intelligence to improve their products. Strong performances by sector leaders support his view. Current market evidence of major disruption remains limited, despite ongoing volatility.
Some new strategic investment opportunities are now available
The iShares Expanded Tech-Software ETF (IGV) has a diversified exposure of the usual companies, such as Microsoft its largest position and Palantir and Salesforce representing the best of SaaS companies, when it comes to sector price-to-earnings ratio, which is 29 responsive valuations of formerly high-margin SaaS companies.
Microsoft, specifically, has the advantage of the lightning-fast growth rate of the Azure cloud infrastructure, the gaming division with Xbox, and the potential to make revenue via LinkedIn, which eventually led to high-teens revenue growth rates. The Estimated Light Train Recovery Graph suggests further momentum may build in the sector. Some analysts are optimistic about a revival. Wall Street analysts predict a 4052% increase in AI-compliant software selection as sector rotation occurs. Demand for Nvidia Blackwell architecture is accelerating, with deeper AI integration. The opportunistic valuation of software property could grow by 2030-3050% by mid-2026. Patient, long-term investors in this area may be rewarded.