Meet the Spectacular ETF With Big Positions in Stocks Like Palantir, Microsoft, and Salesforce. It Could be a Brilliant Buy as the AI Trade Unwinds.
2026-07-30 17:23
•Anthony Di Pizio •The Motley Fool
•••••• ••••••••••••• Axe Cap view
Is the AI Sell-Off in Software Stocks a Chance for South African Investors?
The tech-software ETF IGV is down 11% this year amid AI hype retreat, offering a possible opening tied to legacy software companies regaining footing.
Investor fervor around AI has driven chip costs higher, straining the infrastructure businesses powering AI. Firms are shifting toward cheaper AI options and rehiring human roles, which could ease the threat to traditional software makers. This trend is reflected in IGV, an ETF packed with US software leaders like Microsoft and Salesforce, that’s fallen amid AI worries. For South Africans, the local signal comes via the USD/ZAR rate and Prosus, which holds big stakes in global tech platforms. If tech cools, the rand could strengthen from reduced capital outflow, benefiting investors in SA equity and bonds. That said, if AI spending ramps up again or new tech entrants disrupt faster than expected, legacy plays might falter further. Those tracking IGV and Prosus should watch shifts in global AI capex closely. this is just our opinion and not financial advice
We would watch for a stronger rand as AI hype fades, then consider buying Prosus on dips, while keeping some exposure to financials like Standard Bank that benefit from rand gains. Avoid overexposed chip makers for now until costs stabilize.
- Prosus
- USD/ZAR
- Renewed AI infrastructure spending
- Worsening US tech valuations impacting Prosus
6/10
The iShares Expanded Tech-Software ETF (IGV) has declined 11% this year amid AI disruption concerns, but recent momentum loss in the AI infrastructure boom could present a buying opportunity. Rising chip costs have forced companies to cut AI spending, and reports show businesses are hiring more humans and routing tasks to cheaper AI models, potentially easing pressure on legacy software vendors.
Our take is based on reporting first published by The Motley Fool.