Oracle, Adobe lead software rally on peace deal hopes

US software stocks rose sharply after months of AI-led selling, with Oracle up nearly 13%, Adobe more than 6%, and Salesforce about 5%, as investors welcomed hopes for a US-Iran peace deal.

ServiceNow, HubSpot, and Workday climbed about 7%, while cybersecurity firms Tenable and SentinelOne rose more than 7%, and CrowdStrike gained 6%.

The sector has been under pressure this year on fears that tools from OpenAI and Anthropic could let customers build software faster, squeeze margins, and create new cyber risks.

Many software names remain deeply down this year, adding pressure to private credit market where the sector is major borrower.

🔗 Source: CNBC

🧠 Food for thought

Implications, context, and why it matters.

The rally masks a deep divide between AI fears and software companies’ actual performance

Investors worry AI could help customers swap out software vendors, yet some firms are charging extra for AI add-ons 1.
ServiceNow said Now Assist, its AI product, cleared $600 million in annual contract value (ACV), a measure of annualized customer contract revenue, in Q4 2025 1.
Software valuations have reset. The iShares Expanded Tech-Software Sector ETF (IGV), a widely watched software stock index fund, is down more than 23% year-to-date, while average sales multiples slid from 9x to 6x 2.
Stress in private credit, a market where non-bank lenders make loans directly to companies, looks sharper as a record $25 billion in software-sector leveraged loans, debt issued by heavily indebted companies, trade at distressed levels 2.

Software’s slump may trigger a slow, opaque credit crisis

Private credit strains can stay out of view through “shadow defaults,” where lenders revise loan terms to avoid technical defaults and conceal financial stress 3.
A “doom loop” could follow when lower software valuations weaken loan collateral, forcing credit funds to mark down holdings and face withdrawals 2.
Some investment funds, including those run by Ares Management and Apollo Global Management, have already limited investor withdrawals, also called redemptions, in certain private credit vehicles 4.
Fallout could reach the broader economy since banks have expanded lending to private credit, with JPMorgan’s exposure tripling to $160 billion since 2018 2.