IGV ETF Logs Worst Quarter Since 2008 Crisis: Salesforce, ServiceNow, Workday Lose Over 30%

• Major players were heavily impacted even as the broader market held steady and investors shifted toward energy and AI chip stocks.
• The sell-off has been driven by multiple pressures, including fears that advanced AI agents could reduce reliance on traditional software.
• Despite bearish sentiment and continued weakness in IGV, some analysts like Dan Ives say the decline is overdone.

U.S. software stocks stumbled sharply in the first quarter (Q1) 2026, marking a dramatic reversal for a sector that had long powered equity market gains. The sell-off has been particularly visible in benchmark trackers like the iShares Expanded Tech-Software Sector ETF (IGV), which recorded a steep quarterly decline, signaling a valuation reassessment across the industry.

During Q1, IGV dropped more than 24%, marking its weakest quarter since the 2008 global financial crisis.

Big Tech Names Lead The Decline 

Even established names were not spared. Salesforce Inc. (CRM) and ServiceNow Inc. (NOW) experienced abrupt single-session declines, while smaller cloud-focused companies saw deeper valuation cuts.

Salesforce and ServiceNow plunged over 30% in Q1, while Workday plummeted nearly 40%. Meanwhile, the broader market remained relatively stable, creating a widening performance gap as capital flowed toward energy stocks and AI-focused chipmakers.

IGV traded over 1% lower in Thursday’s premarket. On Stocktwits, retail sentiment around the stock remained in ‘bearish’ territory amid ‘normal’ message volume levels. 

What Drove The Tech Sell-Off?

Experts point to a combination of structural pressures behind the drop. The emergence of advanced AI agents like Anthropic’s Claude Cowork and OpenClaw has raised concerns that traditional enterprise software may become less essential. If automated systems can handle workflows independently, demand for individual software licenses could shrink.

Software companies are pouring considerable resources into AI infrastructure, including high-performance chips and cloud capacity. While revenues continue to rise, profit margins are tightening, prompting investor skepticism about near-term returns.

Third, according to a Bloomberg report, interest rates remain elevated as inflation persists, reducing the appeal of growth-oriented tech stocks that depend on future earnings projections.

Reset Or Opportunity?

Despite the sell-off, some analysts see potential upside. In February, Dan Ives, managing director at Wedbush Securities, characterized the downturn in software stocks as excessive, adding that major players were hit disproportionately and rejected claims that their core business models are broken.

Ives said that AI is a structural driver that will expand spending across the enterprise software market. 

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