State Street SPDR S&P Software & Services ETF

XSW

Market cap $457M

AI software spending is surging, lifting prospects for ETFs like IGV as firms monetize cloud, security and enterprise AI tools.

State Street SPDR S&P Software & Services ETF is downgraded from Buy to Hold after a sharp rebound but persistent underperformance. XSW's diversified, equal-weighted structure limits concentration risk, but it remains the smallest tech ETF on my watchlist and has lagged broader tech indices. Despite a recent 22% rally, XSW is down 12% in 2026 and faces headwinds from potential sector rotation and bearish technology outlooks.

Launched on 09/28/2011, the State Street SPDR S&P Software & Services ETF (XSW) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.

Credit risk in the software sector may still be understated, as weaker growth and less reliable sponsor support could push defaults higher over time, even as refinancing pressure remains low. If the sector weakens further, history suggests losses could be larger than investors expect, as relevant past periods of heavy stress have led to below-average recoveries, not just more defaults.

Designed to provide broad exposure to the Technology - Software segment of the equity market, the State Street SPDR S&P Software & Services ETF (XSW) is a passively managed exchange traded fund launched on September 28, 2011.

Quantum computing ETFs were the hottest names in town for months, but this is no longer the case.

Iran war reshaped Q1 markets: energy, shipping & lithium ETFs surged while tech and airlines lagged as inflation fears and oil shocks rattled sentiment.

IGV and other software ETFs could rally as easing US-Iran tensions lift supply chains, revive spending, and position tech for a rebound in April.

Nvidia's GTC 2026 reveals a transformative AI stack, accelerating SaaS's shift to GaaS and threatening seat-based revenue models, while lowering the barriers to entry. I see Monday.com, Atlassian, and HubSpot facing severe commoditization risks as Agentic AI automates workflows and erodes their competitive moats.

In just two months, the iShares Expanded Tech-Software Sector ETF fell more than 22%, taking its total decline from its peak to over 30%. In the early weeks of 2026, it seemed as though every weekend a new negative article about the sector was published.