Software stocks looked dead in the water just a few months ago. Now, they're making investors who bought the dip very, very happy.

The iShares Expanded Tech-Software Sector exchange-traded fund, or IGV, surged 6.6% on Thursday and has now broke even on the year. That's quite a turnaround for a fund that tumbled almost 30% in 2026's first 100-odd days.

Just a few months ago, conventional wisdom was that autonomous artificial-intelligence agents would replace the subscription-based software that human workers rely upon. But software margins and revenue have remained stable, and some vendors are partnering-not competing-with AI labs.

Salesforce is one. Shares of the customer-relationship-management platform soared 20% on Thursday after reporting solid quarterly earnings and announcing an expanded collaboration with Anthropic. Users can now access Salesforce data and functions within Anthropic's Claude chatbot.

"The leading frontier lab is saying it needs the incumbents, their system of record, and domain expertise to scale AI in the enterprise," Arjun Bhatia, an analyst at William Blair, wrote in a research note.

Instead of replacing software, AI is becoming a "premium-edition upsell" that companies like Salesforce can offer, added Michael Monaghan, a partner at Founder ETFs.

IT service-management platform ServiceNow, for instance, wants to help customers secure and optimize their AI tools. Datadog, up 78% on the year, enables enterprises to monitor their AI agents.

Those pitches aren't empty rhetoric. Stocks in the IGV reported annualized revenue growth of 15% for the 12 months ending in June-the highest figure since 2022, according to FactSet. Gross margins sit at 72.4%, in line with 72.7% a year ago.

Software and hardware are also no longer opposing forces in the market. Over the year's first six months, the iShares Semiconductor ETF more than doubled at the IGV's expense. That so-called pair trade reversed in July and has mostly decoupled in August.

None of this is to say software companies will get back to their pandemic-era golden age, when start-ups went public by the dozen, revenue growth was in the high teens, and the IGV traded at 50 times projected 12-month earnings.

Corporate America is still in the early stages of AI adoption. Anthropic and OpenAI aren't even public yet. Things can change.

But the market seems to be past the doom and gloom of the spring, when the IGV was trading at a measly 20 times forward earnings. The fund is now approaching a 30-times multiple. And big investors are signaling that they are done trading hardware and fading software.