EnterpriseAISEP 05, 2026

IGV up 40% off April lows as Jefferies calls the moat; AI prints $52.4M on 25% revenue decline

The software ETF has retraced nearly its full AI-driven drawdown as Jefferies flags data and workflow moats as durable; C3.ai's fiscal Q1 shows 73% bookings growth against a 25% revenue decline.

BY GRETA REINHART · ENTERPRISE SAAS

The iShares Expanded Tech-Software ETF is up roughly 40% from its April “SaaSpocalypse” lows, and Jefferies analyst Brent Thill spent Wednesday’s client note explaining which parts of that rally he thinks are real. His thesis, distilled: “systems of record, proprietary data and sticky workflows remain durable moats.” Everything else is negotiable.

The market is currently agreeing. Snowflake printed $1.55 billion against a $1.48 billion consensus and rallied 22% Wednesday. Palo Alto Networks came in at $3.41 billion versus a $3.35 billion estimate. Doximity shares more than doubled overnight after CEO Jeffrey Tangney said on the company’s fiscal first-quarter earnings call that Doximity earns “more than 10 times per search in revenue than it costs” on its AI search tool. Dynatrace, Okta, and Salesforce’s Agentforce print round out the tape.

Thill’s corollary matters more than the moat line. Frontier labs, he wrote, “are more likely to partner with leading vendors than own the full stack,” and Jefferies is steering clients toward data platforms and cybersecurity over application-layer AI, where monetization is “more unpredictable.”

Then there’s C3.ai, which reported fiscal Q1 on Tuesday and made the unpredictability concrete. Revenue: $52.4 million, down roughly 25% from $70.3 million a year earlier. Bookings: up 73% quarter-over-quarter across 22 enterprise agreements including Ford, Johnson & Johnson, and multiple federal agencies. Non-GAAP operating loss narrowed to $36.2 million. Free cash flow flipped positive to $2.1 million from negative $34.3 million. FY2027 guidance: $210M to $240M. The stock closed at $10.52 and traded below $10 after hours.

Multi-quarter conversion lag is the company’s explanation for the gap. It’s plausible. It’s also the exact gap Thill is pricing out of the sector’s leaders. Mizuho’s Jordan Klein warned this week that the rally leans on institutional positioning as much as fundamentals, which is the analyst way of saying the vibes have run ahead of the cash flows.

The 2000–2002 software rerating separated infrastructure from applications on the same logic. Twenty-four years later, the moat is data and workflow depth, and the market is repricing accordingly.

Sources

About the author

Greta Reinhart

ENTERPRISE SAAS

Greta Reinhart tracks the enterprise software stack from San Francisco — data platforms, AI bundling, seat pricing, and channel checks across the largest SaaS vendors. She files on go-to-market shifts, packaging changes, and quarterly enterprise reads.