IGV ETF Price Forecast - IGV Slides To $81 As $2T Software Meltdown Clashes With AI Hype

IGV ETF (BATS:IGV) – Software drawdown, AI panic and whether this is a buy at $81.58

IGV ETF (BATS:IGV) – Where the price sits after the software wipe-out

iShares Expanded Tech-Software Sector ETF (BATS:IGV) trades around $81.58, down on the day from a previous close of $82.00, with an intraday range of $80.99–$82.23. Over the last year the ETF has moved between $76.70 and a peak of $117.99, which means the fund is now roughly 30% below its 52-week high and only a few dollars above the floor of the range. Fund AUM sits around $7.8 billion, with an expense ratio of 0.39% and deep liquidity via average daily volume near 1.6 million shares. At today’s level you are being paid to step into a sector-wide crash in software at a price that already embeds a full bear case on AI, margins and growth for the next few years.

Software repriced by $2 trillion while IGV’s biggest holdings keep growing double-digit

The drawdown in IGV ETF (BATS:IGV) is not an isolated move, it sits inside a roughly $2 trillion deflation in listed software market value since the September top. Within the fund, the core group of names that actually drive the factor exposure – Microsoft, Oracle, Salesforce, Palantir and other large SaaS platforms – has been smashed on sentiment, not on collapsing fundamentals. Recent reported numbers are clear. Microsoft printed revenue growth of about 16.7% year-on-year in its last quarter and expanded EBIT by roughly 21%, giving a Rule-of-40 score in the mid-60s, which is exactly what you want to see from a mature, high-margin platform that is still compounding. Oracle posted revenue up around 14.2% with EBIT rising about 12%, translating into a Rule-of-40 score in the mid-40s. Salesforce is slower, at about 8.6% top-line and 16% EBIT growth, for a Rule-of-40 score around 30, but still firmly in positive territory. Palantir is the outlier: revenue growth near 70% year-on-year, and EBIT expanding off a tiny base by several thousand percent, pushing its Rule-of-40 dominance well above 100. These are not the numbers of a sector being erased by AI in real time; they are the numbers of businesses that are still adding revenue, improving profitability and being repriced because narrative and positioning flipped.

The AI paradox behind the IGV ETF (BATS:IGV) sell-off

The current pricing of IGV ETF (BATS:IGV) implicitly assumes two contradictory stories at the same time. On one side, there is the view that AI infrastructure CAPEX is a bubble – hyperscalers commit roughly $660 billion of planned AI investment in the near term and total AI facilities spending is expected to reach around $1.3 trillion by 2027, but the market suddenly claims these dollars will not earn their cost of capital. On the other side, the same market simultaneously behaves as if AI is already so powerful that it will render major software platforms obsolete, strip away SaaS moats and gut the recurring revenue base of the entire sector. Both claims cannot coexist structurally. If AI is truly strong enough to justify writing down $2 trillion of software value now, then the owners of the compute, storage, networking and cloud platforms behind those capabilities are sitting on some of the highest-return CAPEX in tech history and will not see their infrastructure dismissed as “overbuild”. If, instead, AI CAPEX really is a bubble and models fail to deliver enterprise-scale productivity, then it is mathematically impossible for those same models to simultaneously destroy the core economic engines of long-lived software franchises. The current level on IGV ETF (BATS:IGV) is pricing both a failed AI build-out and a successful AI takeover at once, which is logically inconsistent. That inconsistency is exactly where the opportunity sits.

What the “SaaSpocalypse” really is for IGV ETF (BATS:IGV): narrative liquidation, not revenue collapse

The “SaaSpocalypse” tag that traders pinned on the recent software crash is useful as a sentiment snapshot but misleading as a fundamental description. IGV ETF (BATS:IGV) is down more than 20% from its high, which technically qualifies as a bear market, yet the top holdings are still posting healthy growth and strong Rule-of-40 scores. Microsoft, Oracle and Palantir are delivering both revenue expansion and margin improvement; Salesforce is slower but still positive. What actually changed was positioning. AI excitement in 2024 and 2025 concentrated capital into a handful of semiconductor names and mega-cap platforms. When earnings calls began to show heavy AI-related CAPEX lines, investors flipped from “AI is the new electricity” to “AI infrastructure might never pay back”, and software became the funding source for that de-risking. The IGV basket contains both obvious AI winners and laggards. Palantir is rewriting its own playbook around AI-native platforms, while Salesforce has struggled to prove that its marketing push around AI agents is adding meaningful incremental growth. Instead of distinguishing between those trajectories, the market simply marked down everything in the same bucket. That is why a broad wrapper like IGV ETF (BATS:IGV) has been hit so hard: it became the clean vehicle to short “software” against “chips” and hyperscalers, regardless of internal dispersion.

Moats in IGV ETF (BATS:IGV) are not code; they are data, networks, switching cost and trust

The bearish argument that AI tools can “vibe-code” copies of enterprise software in days ignores what actually makes the holdings of IGV ETF (BATS:IGV) durable. The value of these businesses is not their source code; it is the stack of non-replicable assets wrapped around that code. The first layer is network effects. Every additional large customer on Salesforce adds pipeline, configuration and process data that feeds models and dashboards for the rest of the base. Every new user on collaborative platforms, developer tools or security products increases the density of signals and usage telemetry. The second layer is switching cost. Moving from an entrenched CRM, ERP or HR system to a new platform means retraining hundreds or thousands of people, rebuilding integrations, cleaning data and re-documenting workflows. Those costs are measured in months of disruption and millions of dollars, not a weekend experiment. The third layer is data gravity. Historical customer records, billing history, contracts, compliance artifacts and workflow logs cannot be replicated by pointing a generic model at a blank database. They are unique to each platform’s long-term relationships. The fourth layer is career risk and trust. Decision-makers at large corporations do not risk their own job security by betting mission-critical security, finance or operations on a freshly coded, unproven system, even if the demo looks impressive. They prefer to pay for stability and accountability. AI can dramatically speed up how new features are built, but it does nothing to remove these deep moats. That is why the long-term economics of the top exposures in IGV ETF (BATS:IGV) are not dictated by how quickly someone can generate a copy-cat interface.

Forward Deployed Engineering and outcome pricing: how IGV ETF (BATS:IGV) holdings will actually use AI

AI does change how software is delivered and priced. The pattern already visible across several names inside IGV ETF (BATS:IGV) is a shift from pure per-seat SaaS licensing to Forward Deployed Engineering (FDE) plus outcome-based models. Palantir has been ahead of the field on this approach for years. It deploys engineers directly into client environments, builds highly customized AI-driven workflows and then charges through multi-year, high-margin agreements that link economics to the value unlocked. That playbook is now being copied more widely. Anthropic’s large partnership with Accenture, targeting tens of thousands of professionals including FDE roles, sits on the same axis: AI agents plus human engineers embedded in client operations. Major platforms such as OpenAI, Databricks, Alphabet and Salesforce are all hiring for forward-deployed roles around AI projects. For the constituents of IGV ETF (BATS:IGV) this means three things. First, AI will be embedded as a co-pilot inside existing software, not as an external product that replaces it. Second, pricing will increasingly reference outcomes – cost saved, revenue generated, risk reduced – rather than just number of log-ins. Third, FDE-style delivery becomes a new moat: the combination of deep domain expertise, proprietary data and in-house engineering is much harder to replicate than a UI. The SaaS label may fade, but the cash-flow machines behind it will not disappear; they will simply bill differently.

Why enterprises will not replace IGV ETF (BATS:IGV) type platforms with “build-your-own” AI stacks

A common bearish storyline is that large organizations will bypass vendors held in IGV ETF (BATS:IGV) and build their own AI-native stacks on top of commodity models. The theoretical chain is simple: point a Claude- or OpenAI-style agent at internal data, ask it to design workflows, and avoid license fees. That picture ignores how real organizations behave. Corporate IT departments already struggle to maintain existing systems, manage security, audits and compliance. Turning them into full-blown software houses that design, ship and support complex AI flows globally is not realistic. Regulatory, legal and operational risk falls entirely on the in-house team in that model. By contrast, when these organizations sign with Microsoft, Oracle, ServiceNow or other IGV names, they transfer a significant part of that risk outward and gain access to support, roadmaps and ecosystems of partners. Even in areas that look “simple” on paper, such as payroll and HR, the real moat is regulatory complexity and data scale. Players like Automatic Data Processing, which sits in the same broad style bucket as many IGV constituents, use AI to deepen their advantage by training on massive, proprietary datasets that newcomers cannot access. The assumption that AI turns every company into its own best software vendor ignores the friction, governance and liability that surround production systems.

Risk side for IGV ETF (BATS:IGV): AI disappointment, over-CAPEX and genuine losers in the basket

The bullish case for IGV ETF (BATS:IGV) rests on the view that the current sell-off is a narrative flush, not the start of a structural earnings collapse. That does not mean there is no risk. There are at least three that matter. First, AI could under-deliver economically for years, which would hit both the infrastructure names and the platforms that are over-investing ahead of visible demand. In that regime, IGV holdings would still grow, but multiples could compress further as the market unwinds the last leg of AI hype. Second, inside the fund there are genuine execution laggards. Salesforce is the obvious example: high-single-digit revenue growth is not a disaster, but it is slow relative to high expectations and leaves little room for missteps as the business pivots to agents and outcomes. Other mid-cap software names in the ETF will simply fail to adapt pricing or product strategy fast enough and could see margins squeezed. Third, macro risk remains. If higher-for-longer rates persist or accelerate, long-duration cash flows in growth software will continue to be discounted more aggressively than in value sectors. Quant models that currently rate IGV ETF (BATS:IGV) as a “strong sell” are responding mechanically to negative price momentum and valuation compression, not to a collapse in operating metrics, but they can still amplify selling as long as trend signals are red.

Why IGV ETF (BATS:IGV) at $81–82 is attractive even for AI skeptics

One of the most interesting angles is that IGV ETF (BATS:IGV) actually works as a hedge for people skeptical about AI. If AI ends up being a marginal productivity tool rather than a revolution, the heavy CAPEX projects that are now worrying investors will be scaled back and capital will migrate back into stable, cash-generating software franchises. In that scenario, today’s 30% discount to the 52-week high on IGV becomes a straightforward re-rating opportunity as fear around “AI killing software” fades. On the other hand, if AI does deliver on a big part of the promise, the same holdings will be the ones monetizing it at scale: Microsoft integrating AI deep into Office, Windows and Azure; Oracle pushing AI into databases and cloud; Palantir selling AI-driven decision platforms; security and networking names embedding AI across their stacks. In both cases, the broad exposure of IGV ETF (BATS:IGV) means alpha from the winners can offset damage from the losers. For investors who do not want to place single-name bets on each software platform, paying 0.39% a year for a diversified, liquid basket of the entire segment at depressed prices is a rational way to express that view.

IGV ETF (BATS:IGV) – Verdict at current levels: BUY, with the understanding that volatility is part of the trade

Putting the pieces together – price near $81.58, drawdown of roughly 30% from the $117.99 high, top holdings still compounding revenue at high single to high double-digit rates, Rule-of-40 scores well above threshold, CAPEX worries and AI panic compressing multiples, and no hard evidence that AI is destroying the sector’s economics – the stance here is clear. IGV ETF (BATS:IGV) is a BUY at current levels for investors who can tolerate volatility and think in multi-year terms. The software sector has been repriced as if AI simultaneously fails to pay back its infrastructure and succeeds so completely that it wipes out entrenched platforms, an outcome that does not make sense. A more coherent path is that AI reshapes how software is delivered and charged for, rewards players that adopt FDE and outcome-based models, and leaves deep moats around data, networks and trust intact. IGV gives direct exposure to that outcome at a discount, with the understanding that the path back to higher prices will be noisy and sentiment-driven.

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