U.S. software stocks are back near the top of the market after investors spent much of 2026 worrying that AI agents would make traditional software obsolete.

Reuters reports that the S&P 500 software-and-services index has reached its highest level since late 2025. Strong earnings from companies including Salesforce, ServiceNow, and Accenture—and growing customer adoption of AI features—have helped reverse the selloff that traders nicknamed the “SaaSpocalypse.”

The sector’s expected 2026 earnings growth has climbed to 20.6%, up from 13.8% in March, according to LSEG data cited by Reuters. The bigger shift is narrative: AI is increasingly being treated as an enabler for existing software companies, not only a threat.

That does not end the disruption risk. Cheaper AI coding tools, more capable local models, and expanding on-device AI could still pressure software pricing and margins. For now, Wall Street is betting that established software vendors can sell AI faster than AI can replace them.

Software survived the first AI panic. The harder test may arrive as more compute capacity comes online in 2027.