Retail investors fuel record buying in US software ETF as AI trade broadens

June 2 (Reuters) – The largest exchange-traded fund (ETF) tracking U.S. software stocks clocked the biggest single-day buy-in by retail investors on record on Monday, data from Vanda Research showed.

Software stocks have largely recovered their losses from earlier this year when fears of industry-wide disruptions due to the rise of AI gripped the sector, though volatility still persists. 

• Mom-and-pop traders bought stock worth a net $46 million in the iShares Expanded Tech-Software Sector ETF on Monday, surpassing the previous single-day record by roughly 40%, as per Vanda.

• The ETF’s previous record buying day was in early February, when retail traders purchased a net $32.8 million.

• “The AI/semi trade is showing early signs of broadening out from a flows perspective. Software is emerging as one of the initial beneficiaries,” Vanda Research said in a note.

• ServiceNow, International Business Machines, Adobe, Atlassian, Salesforce and Workday rallied between 7.5% and 9.6% in the last session.

• The iShares Expanded Tech-Software Sector ETF jumped 5.9%, touching its highest level in about five months.

• Investor worries around AI disruption have been building since Anthropic in February launched new tools that automated tasks across domains, including marketing and data analytics, raising concerns such products could pressure traditional software businesses.

• The recent rally, however, lost some steam on Tuesday as the software ETF dipped 3.1%. Intuit and Workday were also among the stocks at the bottom of the S&P 500 in early trading.

• Including Tuesday’s losses, the software ETF was down more than 1% year-to-date.

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Jonathan Ananda)