Software stocks crushed chips in August. History says September gets tougher: Chart of the Day
Jared BlikreTue, September 1, 2026 at 1:00 PM GMT+3 2 min read
Software just posted its second-best month since 2002. Meanwhile, chip stocks barely held on to a gain in August after being up nearly 10% mid-month.
The iShares Expanded Tech-Software Sector ETF (IGV) surged over 16% in August, while the iShares Semiconductor ETF (SOXX) finished up only 1%. The S&P 500 gained just over 2.5%.
For a while, chips were keeping pace. But in the final two weeks of the month, SOXX gave back most of its rally while software kept pushing higher.
And chips weren't alone.
The companies supplying the physical guts of the AI boom — electrical equipment, power infrastructure, networking gear, and construction — had all surged into mid-August. Then those trades rolled over together, while software kept climbing.
That extended a record divergence between software and chip stocks that was already opening up earlier in August.
The winners were hard to miss.
Shares of Atlassian (TEAM) nearly doubled in August — their best month ever. Palantir (PLTR) jumped more than 50%, while Salesforce (CRM) surged more than 40% in its best month since 2005.
ServiceNow (NOW) gained over 30%, and CrowdStrike (CRWD) rose more than 20%.
Chips went the other way in the back half of the month. Since Aug. 17, 58 of 61 semiconductor stocks in a Yahoo Finance basket fell, wiping roughly $1.1 trillion from the group's market value.
That leaves September with a very different starting point. Software enters the month with the momentum, while much of the physical AI trade is already on the defensive.
And this wasn't an ordinary software rally.
A broader S&P software index gained roughly 14% in August, its strongest August in data going back to 1990.
So Yahoo Finance looked at the 12 strongest prior August rallies in software over that history and what happened next.
Software historically held up through Sept. 15, with a median gain of about 1%. Semiconductors were already down roughly 1% by then.
Then things got tougher.
From Sept. 15 through month-end, median software returns fell roughly 1%, the S&P 500 dropped almost 2%, and semiconductors slid about 3.5%.
Twelve observations make a small sample, so this is a tendency rather than a forecast.
The broader calendar isn't particularly friendly either. September has historically been the weakest month for the S&P 500, while volatility has tended to pick up as summer ends.
August showed the market could rotate around weak chips. September will show how long that can last.
Jared Blikre is the global markets and data editor for Yahoo Finance. Follow him on X at @SPYJared or email him at jaredblikre@yahooinc.com.
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