Investors are excited about the potential of generative AI to boost productivity and cut costs for businesses. However, concerns over the impact of AI on enterprise software have led to a drop in share prices for many software stocks. The iShares Expanded Tech-Software Sector ETF (IGV) has seen an 18% decrease from its peak, but revenue growth remains strong. While fears of AI displacing traditional software linger, integrating AI features has helped companies like Microsoft and Palantir drive revenue growth. The ETF offers a simple way to invest in the software industry amidst evolving narratives.

The iShares ETF tracks North American software companies, with top components like Microsoft, Palantir, and Oracle benefiting from AI enthusiasm. Despite concerns that AI could replace existing software solutions, the majority of the ETF’s holdings, including Salesforce, Intuit, and Adobe, have seen negative impacts on earnings multiples. However, the idea that a single AI tool can replace specialized software is overstated, as most providers are integrating AI capabilities into their offerings. For investors seeking exposure to the software industry, the iShares ETF provides a straightforward option.

Read more at Nasdaq: This ETF Could Be a Great Contrarian Artificial Intelligence (AI) Buy Right Now