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It’s been a rather rocky start to the year, especially if you’re a tech investor who’s a bit too heavy on the SaaS (Software-as-a-Service) names, which investors may think might be in for existential threats as the latest and greatest agentic AI technologies come into the prime. Of course, time will tell if it’s too soon to go bottom-fishing for software. Either way, I think the AI disruption wave is just getting started. And, with that, investors should be careful which kinds of tech names they look to pick up on the way down. At the same time, investors tend to panic and sell first while asking questions later.
Often, that leads to overdone sell-offs and opportunities for value investors who know how to get through all the noise. So far this year, there has been no shortage of noise. So, stock pickers with extra cash to invest might have a chance to get a fairly great deal, even though the market averages are still in an “expensive,” even overvalued area.
In this piece, we’ll check out two growth ETFs that might offer a better value than the rest of the market.
iShares Expanded Tech-Software Sector ETF
First up, we have one of the most talked-about ETFs in recent weeks: the iShares Expanded Tech-Software Sector ETF (IGV), which has been under serious pressure so far this year, thanks in part to the release of new AI tools from the likes of Anthropic and now OpenAI. Year to date, the software ETF is down around 17%.
Though, things have calmed down a bit in recent sessions. Whether it’s safe enough to get back into the software waters, though, remains the big question. Like it or not, software is on sale, with the ETF now off more than 27% from its all-time highs. As AI challenges the economics of SaaS, questions linger as to whether they’ll lose their way as new AI tools drive down the price of dashboards and other commoditized pieces of software. What many investors may be discounting, though, is how SaaS firms will react to the threat of agentic AI.
Of course, it’ll take more than launching an agent to prevent SaaS firms from becoming more than a database with a pretty interface that’s easily generated by a coding agent. Though I think software faces increasing headwinds over the longer term, I don’t think the disruptive potential of agents will upend their business models overnight. As such, software looks like more of a value buy than a sell, especially for those seeking contrarian value in a market that’s all about AI.
Ark Innovation ETF
The Ark Innovation ETF (ARKK) is also experiencing a tough start to the year, with shares down over 7% year to date. Undoubtedly, Cathie Wood’s Ark Invest aims to be on the right side of the innovative wave. And while this climate seems perfect for the kind of disruptive innovators under the hood of the Ark Innovation ETF, the weakness in Tesla (NASDAQ:TSLA | TSLA Price Prediction) shares, as well as volatility in cryptocurrencies (some notable crypto stocks are aboard the Ark), has acted as a drag of late.
The so-called SaaS-pocalypse has also weighed down some names within the ETF. Most notably, Roblox (NASDAQ:RBLX), which experienced quite a scare amid the launch of Google Genie. As impressive as Genie was, I thought the shockwave sent through the gaming universe was overdone.
If you’re a long-term believer in crypto and the physical AI opportunity for Elon Musk’s Tesla, I think the Ark Innovation ETF might actually be going for too cheap for its own good. As rates fall and we enter the era of robotics, I don’t think Cathie Wood’s ETFs will be left behind. In the meantime, the 22% dip in the ETF certainly seems tempting, especially for the big believers in Wood’s comeback as we prepare for the “Great Acceleration” of 2026.