Earnings Signal: Month Since in Focus as New Reports Land

Late-May earnings delivered a clear message for software investors: the market is no longer pricing the sector as a single AI casualty. Strong quarterly reports from Snowflake and Okta, along with enthusiasm for their AI software strategies, triggered record post-earnings surges in both stocks and helped pull the broader group sharply higher.

That does not settle the longer debate over which business models will benefit most from AI, but it does show that investors are willing to reward companies that can present a credible path through the disruption.

The broader move was striking. The iShares Expanded Tech-Software ETF rose 8% for the week and ended May up 21%, its best monthly performance since October 2001.

That kind of rebound matters because it followed months of anxiety that generative AI could weaken software pricing power, commoditize products or shift value toward infrastructure providers rather than application vendors.

What changed, at least for now, was not the existence of the threat but the market’s willingness to discriminate. Snowflake and Okta became proof points that investors are starting to sort companies by execution, product relevance and the ability to turn AI spending into something more tangible than excitement.

The reaction suggests that when earnings and management commentary point to resilience, the market is prepared to move quickly, even after a period when much of software had been treated as vulnerable by default.

That distinction is important for reading the month’s rally. A 21% gain for the software ETF and record jumps in two high-profile names are meaningful signals, but they are still early signals.

They imply that the “software is broken” narrative has weakened, not that AI risk has disappeared; the burden now shifts to future quarters, when investors will want to see whether product adoption, retention and growth can keep pace with rising expectations and richer valuations.

There are also signs that the AI trade may be broadening beyond software, though the evidence is less complete. Ford was reported to be heading for its best month since the financial crisis, tied to the same wave of AI enthusiasm pushing risk appetite higher.

Even if that move says more about market mood than about the company’s own earnings outlook, it underlines how powerful the current AI narrative has become across sectors.

For investors, the practical takeaway is that proof matters more than slogans. After such a powerful month, the next leg higher will likely require more companies to show that AI is lifting demand, improving product positioning or supporting guidance rather than simply raising costs.

If upcoming results reinforce that pattern, May may come to look like the start of a broader rerating in software; if not, a rally of this size could prove to be a relief move that outran the fundamentals.

That leaves the sector in a more nuanced place than it was a few weeks ago. The key question is no longer whether AI will disrupt software, because that seems increasingly embedded in the outlook.

The question is which companies can convert that disruption into better revenue, steadier margins and more convincing guidance quickly enough to justify the market’s sharp change in attitude after its strongest month in nearly a quarter-century.

Published at 2026-05-30T00:01:43.390364+00:00 UTC

Related Symbols

• SNOW — Snowflake
• OKTA — Okta
• CLOU — Cloud Computing ETF (ETF)
• NOW — ServiceNow
• CRM — Salesforce
• WDAY — Workday
• TEAM — Atlassian
• MNDY — Monday.com
• Selection note: Reports highlight a broad software/SaaS earnings-driven rally led by Snowflake and Okta, with spillover to cloud software peers and the cloud software ETF.

References

• CNBC
• Bloomberg