Observed Signal · Jul 8, 2026 · Market Analysis / Investment Idea · Source: CNBC Investing · Impact: 2/5 · Sentiment: Neutral
Crowded tech trade starting to unwind
CNBC contributor Todd Gordon reports that a long one‑sided tech trade — long semiconductors and short software — appears to be reversing. Chart indicators show the software ETF (IGV) rising versus the semiconductor ETF (SMH) after a recent low, and software is also improving versus the broader tech sector and the S&P 500. Gordon cites a Jefferies research report that contends “software is not dead, but weak software is,” and notes Jefferies names ServiceNow and Snowflake as top picks within a framework that favors infrastructure/hyperscaler names for AI growth while being selective on application software. The article outlines technical patterns and fundamentals for ServiceNow (a possible inverse head & shoulders) and Snowflake (strong revenue, net retention and an OpenAI partnership) as two ways to play the potential rotation.
Sector-rotation market commentary highlighting a potential reversal from semiconductors to software and naming specific stock ideas; useful to investors but not industry‑shifting policy or platform news.
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Key Takeaways & Evidence Grounding
- Article published July 8, 2026 by Todd Gordon.
- Charts show the IGV/SMH (software/semiconductor ETF) ratio bottomed near 0.13 recently and has turned higher.
- Jefferies’ 65-page research report 'What’s Ailing Software' concludes 'software is not dead, but weak software is' and names ServiceNow and Snowflake as top picks.
- Guggenheim upgraded ServiceNow to 'buy' on July 1; ServiceNow is cited as roughly 50% below its high and showing a potential inverse head-and-shoulders setup.
- Snowflake reported a recent quarter with EPS beating expectations by 22%, product revenue up ~34%, a 126% net-retention rate, and a new partnership with OpenAI.
Connected Companies & Entities
9 Entities mapped“As shown in the top-10 holdings of both ETFs (remember you must know what you own when holding ETF’s and mutual funds!), money rushed into N...”
“Within that framework, both of the stocks below are named as Jefferies’ top picks: ServiceNow, in application software, and Snowflake , in i...”
“As shown in the top-10 holdings of both ETFs (remember you must know what you own when holding ETF’s and mutual funds!), money rushed into N...”
“I spent most of my morning reading through a 65-page research report from the brilliant research team at Jefferies called “What’s Ailing Sof...”
“As shown in the top-10 holdings of both ETFs (remember you must know what you own when holding ETF’s and mutual funds!), money rushed into N...”
“All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company...”
“Within that framework, both of the stocks below are named as Jefferies’ top picks: ServiceNow, in application software, and Snowflake , in i...”
“Last quarter, EPS beat expectations by 22%, product revenue grew about 34% beating the company’s own guidance by a wide margin, with a recor...”
“Guggenheim upgraded ServiceNow to buy on July 1 in a note it framed as “Armageddon called off.”...”
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Software Stocks Rally in Q3; Cramer Sees More Upside
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Cramer: Software Rally May Be a Short Squeeze
CNBC’s Jim Cramer warned that the recent rebound in beaten-down software stocks may be driven more by short covering than by improving fundamentals. Speaking on Squawk on the Street, Cramer described the move as a “genuine hedge fund squeeze” and said heavily shorted software names have rallied as investors rotate out of semiconductor and AI hardware stocks. He highlighted modest gains in Salesforce, ServiceNow’s prior-session jump after Bank of America reinstated coverage, and Nvidia’s near-term weakness ahead of earnings. Cramer’s Charitable Trust owns Salesforce and Nvidia. He said demand appears stronger for semiconductors and AI infrastructure than for software-as-a-service, and warned the software rally could be short-lived absent fundamental improvement.
Cramer: Software Rally Could Foreshadow AI Stocks' Comeback
CNBC’s Jim Cramer said the recent rebound in enterprise software shows how quickly investor sentiment can shift and suggested beaten-down AI infrastructure and data-center related stocks could follow a similar path. He pointed to ServiceNow’s July 22 earnings as a catalyst that helped lift software names, noting ServiceNow and Salesforce rose roughly 22% and 15% respectively since that report. Cramer added that a supportive macro backdrop and evidence that AI-related spending is producing results would be needed to reignite investor confidence in the AI infrastructure complex.
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