The stocks of software companies experienced their worst sell-off earlier this year since the pandemic-driven rout in March 2020. However, the U.S. indexes have rallied over the past two weeks. Because the economy is mending, the software sector is expected to grow significantly amid robust demand. The digital transformation of businesses, remote working arrangements, and automation across industries including manufacturing, healthcare, retail, and transportation are the contributing factors to sustained demand in the tech sector. Furthermore, an increase in corporate spending on digital transformation, cloud computing, big data analytics, and other tech areas is expected to drive the growth of software stocks.
The software sector’s revenue is expected to reach $608.7 billion by 2022 and $806.2 billion by 2027, growing at a 5.8% CAGR. Approximately $303.10 billion of the worldwide revenue is estimated to be generated in the U.S. in 2022. Investors’ bullish sentiment surrounding the industry is evident from Technology Select Sector SPDR ETF’s (XLK) 7.3% gain over the past month and 14.6% gain over the past year.
