Beyond Nvidia: Why Software Stocks Just Crushed Semiconductors in a Historic 25-Year Shift

Software funds have outperformed semiconductor funds by a 25-year record margin on Sept. 14. Capital shifted from chip makers to application software providers, marking a rotation within the technology sector.

A Record-Breaking Sector Swing

The iShares Expanded Tech-Software Sector ETF (BATS:IGV) rose 5.04% in a single session, while the VanEck Semiconductor ETF (NASDAQ:SMH) fell 4.75%. The ratio comparing IGV to SMH surged 10.29%, marking the largest single-day relative outperformance for software against semiconductors in a quarter-century.

Market strategist Ryan Detrick highlighted the performance shift in a public post analyzing sector trends.

“Software was up 5% today and semis were down 5%,” Detrick wrote. “Going back 25 years, this was the best day software has ever had relative to semis.”

Detrick stated that such sector movements reflect underlying structural health across equity markets rather than weakness.

“The lifeblood of a bull market is rotation and we continue to see it,” Detrick wrote.

AI Productivity Drives Software Revenue

The shift in market momentum aligns with expanding revenue metrics across application software companies. Data published by 3Fourteen Research shows trailing 12-month S&P 1500 application software revenue per employee reached $290,066 in mid-2026. The metric samples trailing revenue against Bureau of Labor Statistics payroll data for U.S. software publishers.

From 2000 through 2022, software revenue per employee grew at a linear trend of $2,454 per year. From 2023 onward, that growth rate accelerated to $38,538 per year, demonstrating significant operational leverage in the post-AI era.

The founder of 3Fourteen Research, Warren Pies, attributed this acceleration directly to enterprise artificial intelligence adoption.

“S&P 1500 Software revenue per employee has gone parabolic,” Pies stated in a market analysis. “If you are looking for evidence that AI is starting to impact the real economy, this is exhibit A.”

The combined data from Detrick and Pies indicates that investors are expanding capital allocation beyond hardware providers like Nvidia Corp. (NASDAQ:NVDA) toward software companies actively monetizing artificial intelligence applications.

How Have These Sectors Performed?

Here’s how the ETFs tracking these software and semiconductors sectors have performed.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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