Software Stocks Stage a Comeback: Snowflake and Okta Lead the Charge

Remember the 'SaaSpocalypse'? The panic that AI would wipe out traditional software companies? It’s not gone, but for now, the market is breathing easier. Software stocks just wrapped up their best month since October 2001, with the iShares Expanded Tech-Software ETF surging 21% in May. That’s a stark contrast to the dot-com era rebound—this time, the rally is fueled by evidence that some firms are actually thriving amid the AI shift.

Snowflake was the standout, logging its best day ever after announcing a $6 billion cloud-and-chip deal with Amazon. The data platform provider raised guidance, with CEO Sridhar Ramaswamy noting customers are “deploying and scaling workloads at a faster pace.” Analysts at Argus Research see Snowflake as a key beneficiary of generative AI, arguing enterprises need to unify data before they can exploit AI tools. The stock closed Friday at $255.55, up 17% for the year.

Okta also had a record day, jumping 30% after beating earnings expectations. CEO Todd McKinnon told CNBC that the shift to agentic AI is driving demand for identity security, as businesses brace for bot armies. “Every organization is going to build and deploy agents,” he said, calling it “fundamental infrastructure.”

Other winners included Atlassian (up 26%), ServiceNow (over 20%), and Shopify, Workday, and Asana (each up at least 14%). Even cloud giants Oracle and Microsoft saw gains, though Microsoft remains down nearly 7% for the year. The iShares software ETF is now off just 3.8% year-to-date, still trailing the Nasdaq’s 18% gain. But for a sector that felt like it was on life support, this month offers a glimmer of resilience.