Software funds fall 2.9% as application names are marked down
iShares software ETF IGV dropped 2.9% in the week ended September 11. Oracle grew cloud-infrastructure revenue 121%, and Adobe set fourth-quarter sales at $6.80 billion to $6.85 billion.
Key takeaways
State Street’s $120 billion U.S. technology sector fund XLK returned 0.2% through Friday, September 11. The software fund that holds Oracle, Adobe, Salesforce, and Palantir, iShares Expanded Tech-Software Sector ETF IGV, fell 2.9%. Both Oracle and Adobe beat quarterly estimates. Both stocks still lost 5.4%.
That was the week inside “tech”: infrastructure demand was loud, application software was cheaper, and Nvidia’s 5.2% decline did not define the sector fund because Apple, AMD, and Intel offset the weight.
Broad tech holds; software does not
The four-session week after Labor Day left cap-weighted technology almost unchanged and the Nasdaq-100, via Invesco QQQ Trust QQQ, down 0.6%. The S&P 500, via SPY, fell 0.8%. Inside the sector the books diverged.
IGV fell through the week as XLK held
- XLK · 187.67
- IGV · 101.52
Equal-weight technology and the capped semiconductor fund outperformed the Nvidia-heavy versions. Cloud software, even in an equal-weight sleeve, fell more than the concentrated software fund.
Nvidia’s decline in XLK was nearly cancelled by Apple and AMD. Vanguard Information Technology ETF VGT, which holds more of Nvidia, finished down 0.2%.
In IGV, Palantir, Oracle, Salesforce, and ServiceNow, 28% of the fund together, subtracted 1.3 percentage points, about 46% of the decline. The rest of the book fell too. WisdomTree Cloud Computing Fund WCLD, whose largest position is about 2%, dropped 4.8%. The software selloff was broad, not a four-name accident.
IGV is down 3.9% year to date. XLK is up 30.7%. The year’s technology gain is still an infrastructure story. This week did not rewrite that. It invoiced the application layer.
Oracle’s 121% growth and Adobe’s dip
Oracle reported fiscal first-quarter results after the close on Thursday. Non-GAAP earnings were $1.92 a share against a $1.74 estimate; revenue was $19.3 billion. Cloud infrastructure revenue rose 121% to $7.4 billion. Remaining performance obligations reached $664 billion after more than $30 billion of additional AI-cloud contracts. The company said it had delivered more than 300,000 GPUs since the end of the prior quarter.
Cloud applications, the older software business, grew 10% to $4.2 billion. Capital spending was $28.5 billion. Free cash flow was negative $5.4 billion.
The stock had already fallen 5.4% on Thursday alone, into the print. On Friday it traded as high as $165.99, then closed at $150.15, a 9.5% fade from the session high. Oracle is 6.2% of IGV and subtracted 0.33 percentage points from that fund.
Adobe, reporting the same evening, posted $6.76 billion of third-quarter revenue, up 13%, and non-GAAP earnings of $6.13 a share against $6.08. AI-first annual recurring revenue grew more than 150%. The company said it had reached 1 billion monthly active users, kept a 10.2% ending ARR growth target, and raised fiscal 2026 non-GAAP earnings guidance to $24.45 to $24.50. Fourth-quarter revenue was set at $6.80 billion to $6.85 billion.
Most of Adobe’s weekly decline happened before that report. Shares fell from $266.51 on September 4 to $248.83 on Thursday. They traded as low as $241.52 on Friday and closed at $252.23, up 1.4% on the day, still down 5.4% for the week and 28% year to date. It is 3.5% of IGV.
On September 11, Gil Luria, D.A. Davidson’s head of technology research, said the dip was justified: in-line results do nothing to dismantle an “AI loser” perception, and a months-long chief-executive transition added pressure. He rates the shares Buy with a $250 target, just under Friday’s close.
ServiceNow, Salesforce, Palantir, and Intuit did not report this week. Software was being marked down before anyone published a 10-Q. Luria was speaking about Adobe; the rest of the book already traded as if that view applied.
The same week, Meta launched Muse, a consumer AI agent with a free tier and paid plans at $20 and $100 a month. Meta shares jumped 6.6% on Wednesday.
Meta jumped; the software book was marked down
Nvidia’s weight splits the semiconductor funds
VanEck Semiconductor ETF SMH rose 0.3%. Nvidia, 22.4% of the fund, subtracted 1.2 percentage points. AMD, Qualcomm, and Intel added 1.1 percentage points combined. iShares Semiconductor ETF SOXX, which caps its largest names, holds Nvidia at 9.2% and rose 1.4%. Same industry, different concentration, different week.
Qualcomm announced on Tuesday a multi-generation collaboration with Amazon to build customized silicon for AI data centers and to work on optical connectivity up to 1.6T. The stock rose 3.2% that session and 7.8% for the week. It is 4.2% of SMH. AMD gained 8.1%, Intel 7.5%. Micron, 5.6% of the semiconductor fund, fell 4.1%.
Apple unveiled its first foldable iPhone, the Duo, on Wednesday. Shares slipped 0.3% that session, then rose 3.6% on Thursday and 1.7% on Friday, finishing the week up 3.8%, XLK’s largest positive contribution.
On Friday, XLK rose 1.3%. The bounce did not repair the software fund. IGV added 0.3%.
What the week’s prices assume
Friday’s closes treat AI infrastructure demand as settled. Oracle can grow that business 121%, book more than $30 billion of new contracts, and still be marked as a cash-conversion problem at $150.15. They treat 13% software growth and a 10.2% ARR target as insufficient to re-rate the shares. And they treat Nvidia as a holding that can fall 5.2% without taking the sector fund with it, provided Apple and a handful of other chipmakers move the other way.
Holders of XLK lived that last assumption. Holders of IGV lived the first two. The year-to-date gap between those funds, 30.7% up versus 3.9% down, is the same bargain, just drawn over nine months.
ETFs in this story
Frequently asked questions
Why did software funds fall when the earnings were good?
Prices treated Oracle's negative free cash flow and heavy capital spending as a cash-conversion problem, and Adobe's in-line 13% growth as too little to re-rate the shares.
Was the decline just a few big holdings?
No: Palantir, Oracle, Salesforce and ServiceNow accounted for under half the drop, and the equal-weight cloud software fund fell even harder.
How did the semiconductor funds diverge?
The Nvidia-heavy fund rose 0.3% while the version that caps its largest holdings rose 1.4%, on the same industry and the same week.
What does the year-to-date picture look like?
Broad technology is up 30.7% while the software fund is down 3.9%, leaving the year's gain an infrastructure story.
