The software had a chance to take over, but the chips took it back.
The iShares Expanded Software and Technology Sector ETF (IGV) is no longer breaking down. After falling more than 5% on Thursday (its worst day since the post-“Liberation Day” sell-off on April 4), it recovered to end the week slightly positive.
That rally still leaves it far behind the iShares Semiconductor ETF (SOXX), which is up 11% in the same stretch, a sharp reversal from the broader tech breadth story that had been building. A graph that was circulating this week showed that the ratio of software to semi-finals recorded its biggest one-day drop on record.
That does not end the thesis of the return of software. But with the broader market rising, the bulls really wanted to see IGV hit new April highs by now. Instead, the group fell back and returned the lead to the chips.
The good news for software bulls is that IGV held where it needed to, finding buyers near two key levels that landed at $82: its 50-day moving average and the 50% retracement of the move from its April 10 low to Wednesday’s high.
That keeps the false breakup and recovery case alive, even if the group is no longer leading.
Meanwhile, the PHLX Semiconductor Index (^SOX) and the related iShares Semiconductor ETF are enjoying a record 18-day winning streak, with the last 13 sessions also marking all-time highs. The index is experiencing its best month since February 2000, with an increase of 40% in April.
Within the chip complex, milestones are piling up.
Nvidia (NVDA) surpassed $5 trillion in market cap again last week. Intel (INTC) rose 24% on Friday, the most since October 1987, after surpassing its post-earnings dotcom highs. And Texas Instruments (TXN) posted the biggest jump since 2000 after topping earnings on Wednesday.
Surprisingly, none of those names topped the chip rankings.
Arm (ARM) rose more than 40%, the most in two years, while Advanced Micro Devices (AMD) rose 25%. Taiwan Semiconductor (TSM), Qualcomm (QCOM) and KLA (KLAC) all rose in the high single digits, a sign that strength is spread across AI chips, foundries, wireless and equipment.
The software acts much more selectively.
Synopsys (SNPS) closed the week up 11%, but its double-digit performance was an outlier. Cadence Design Systems (CDNS), Palo Alto Networks (PANW), and CrowdStrike (CRWD) rose 5% to 7%.
But GitLab (GTLB) just hit an all-time low, while Cognizant (CTSH) and Fair Isaac (FICO) hit new multi-month lows this week. ServiceNow (NOW) is also on track to post a seventh consecutive monthly decline after having its worst day ever on Thursday.