The software sector just logged its strongest month in over two decades, with the iShares Expanded Tech-Software ETF closing May up 21% — its best monthly performance since October 2001. The rally, driven by standout earnings from Snowflake and Okta, suggests that the market’s earlier fears of an AI-induced collapse in traditional software may have been overstated.

Snowflake was the week’s headline act, surging nearly 50% in four sessions after announcing a $6 billion cloud and chip partnership with Amazon and raising guidance. CEO Sridhar Ramaswamy noted customers are “deploying and scaling workloads at a faster pace,” a signal that enterprise AI adoption is actually driving demand for Snowflake’s core data unification capabilities. Argus Research analysts upgraded the stock to a $300 target, framing Snowflake as a “picks and shovels” play on generative AI — the infrastructure layer, not the hype.

Okta posted a record 30% single-day gain on Friday after beating estimates. CEO Todd McKinnon pointed to agentic AI as a forcing function for identity security: “Every organization is going to build and deploy agents. It’s fundamental infrastructure.” That’s a shift from the narrative that AI tools like vibe coding would commoditize identity management.

Other names followed: Atlassian climbed 26% for the week, ServiceNow added 20%, and Shopify, Workday, and Asana each rose at least 14%. Even the cloud infrastructure giants joined in — Oracle jumped 16%, Microsoft nearly 8%. Still, Microsoft remains down 7% year-to-date, the worst performer among megacaps.

The broader takeaway for data and ML engineers: the market is revaluing software as the platform for AI workloads, not the victim. The SaaSpocalypse talk hasn’t vanished, but the data suggests enterprises are spending on infrastructure that unifies, secures, and scales — exactly the systems we build.

Source: CNBC