Software stocks have seen a notable recovery, with the iShares Expanded Tech-Software Sector ETF (IGV) rallying about 6% on Monday, bringing its year-to-date performance into positive territory for the first time. This follows a dramatic sell-off that saw the sector lose nearly 40% from its highs last year.
The IGV is now less than 9% away from its all-time high reached in September, having surged 44% from its low in April. Cybersecurity stocks are at the forefront of this rally, with the Amplify Cybersecurity ETF (HACK) up over 30% year-to-date, driven by significant gains in companies like CrowdStrike and Palo Alto Networks, which have risen 67% and 63% respectively in 2026.
Christian Magoon, CEO of Amplify ETFs, noted that the rise in AI usage is increasing the demand for cybersecurity solutions, which could also lead to more mergers and acquisitions in the sector. Options trading has reflected this bullish sentiment, with call volumes in the IGV ETF outpacing puts, indicating strong investor confidence.
Upcoming earnings reports from major players like Palo Alto Networks and CrowdStrike are anticipated to be pivotal, with traders expecting significant price movements, particularly around CrowdStrike's earnings on Wednesday, where options pricing suggests an almost 9% expected move.
However, historical data indicates that the options market has often overestimated actual stock movements in recent quarters