The technology landscape is experiencing a notable divergence, with the semiconductor industry demonstrating robust growth while the software sector shows signs of stagnation. This contrast is reflected in market performance, as the iShares Expanded Tech-Software Sector ETF ($IGV) has largely traded sideways over the past five years, while semiconductor-focused ETFs have seen significant gains.
Investors are increasingly favoring the hardware side of tech, driven by demand for chips powering artificial intelligence, 5G infrastructure, and the broader digital transformation. This shift in sentiment has left software companies, once the darlings of Wall Street, struggling to maintain momentum. The $IGV ETF, which tracks North American equities in the software industry, closed at $82.77 on February 13, 2026, according to Google Finance data , a modest increase from previous levels but a stark contrast to the gains seen in the semiconductor space.
Software Sector Performance: A Five-Year View
The iShares Expanded Tech-Software Sector ETF ($IGV) has experienced limited growth in recent years. As of February 13, 2026, the ETF’s 52-week range is $76.70 to $117.99 , indicating a period of volatility but ultimately a lack of sustained upward trajectory. The fund’s market capitalization stands at $1.03 billion , with an average daily trading volume of 1.39 million shares. The expense ratio for the ETF is 0.39% .
Several factors contribute to this relative underperformance. Increased competition, longer sales cycles, and a shift towards open-source solutions are all putting pressure on software margins. The current economic climate, characterized by higher interest rates and concerns about a potential recession, is prompting investors to favor more tangible assets like semiconductors.
Semiconductor Surge: Fueling Tech Gains
In contrast to the software sector, the semiconductor industry is booming. Demand for chips is soaring, driven by the proliferation of AI applications, the growth of electric vehicles, and the ongoing expansion of cloud computing. The VanEck Semiconductor ETF ($SMH) has significantly outperformed the $IGV ETF in recent years, closing at $407.72 on February 13, 2026 .
Companies like Nvidia, AMD, and Taiwan Semiconductor Manufacturing Company (TSMC) are at the forefront of this growth, benefiting from their leading positions in the chip market. Government initiatives, such as the CHIPS and Science Act in the United States, are also providing significant support to the semiconductor industry, incentivizing domestic manufacturing and research and development.
Key Holdings and Market Sentiment
The top 10 holdings of the iShares Expanded Tech-Software Sector ETF ($IGV) as of February 13, 2026, represent approximately 59.89% of the fund’s assets . These include Microsoft (9.66%), Oracle (8.07%), Palantir Technologies (7.91%), Salesforce (7.33%), and Palo Alto Networks (5.48%). Recent news indicates a cautious sentiment towards software stocks, with reports of a software slump resuming alongside broader market volatility . Schaeffer’s Investment Research noted that options traders are buying the dip on this software ETF, suggesting some belief in a potential rebound .
What to Watch Next
The divergence between the software and semiconductor sectors is likely to continue in the near term. Investors will be closely watching earnings reports from key software companies to assess their ability to navigate the challenging macroeconomic environment and maintain growth. The ongoing development of AI and its impact on software demand will also be a critical factor. Geopolitical tensions and supply chain disruptions could further exacerbate the challenges facing both sectors.
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