From AI doom to opportunity: Why Dan Niles has a change of mind on software stocks

Veteran technology investor Dan Niles is rethinking one of his long-held views about software stocks. For much of 2026, the market appeared to be following a simple AI trade, buy chipmakers and sell software companies. The thinking was straightforward. If artificial intelligence could eventually do many of the things traditional software does, why continue paying high valuations for software companies?

This became one of the defining market stories of the year. The Philadelphia Semiconductor Index, or SOX, surged 62%, while the software-focused IGV ETF gained just 4%, trailing the S&P 500’s 13% rise. However, Niles now believes that story may be changing.