By Sinéad Carew

June 3 (Reuters) – Software stocks have rebounded from a punishing selloff as investors are betting that AI may boost the sector rather than leaving it for dead.

The iShares Expanded Tech-Software Sector ETF has surged nearly 42% from its April low, turning fears that AI would rip the heart ‌out of the industry into hopes that software firms will enlist AI as a valuable ally. The software ETF is down under 2% for 2026 after ‌earlier falling 30%.

Now investors are flocking to firms they see succeeding at integrating AI and adjusting price models by charging clients based on actual usage – while steering clear of firms that are too dependent on traditional pricing, ​which involves subscription fees…