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CIO Bulletin,
26 June, 2026
Author:
Gayathri Sr
A bold new investment strategy bets that artificial intelligence is about to disrupt traditional tech giants from the ground up
The tech world is witnessing a massive tectonic shift, and a brand-new Nasdaq 100 ETF is leading the charge by doing something completely unexpected: completely cutting out software companies. Defiance ETFs has officially launched the Defiance US 100 Tech Ex Software ETF (trading as XIGV), marking the very first time an investment fund is targeting the powerhouse tech index while deliberately screening out the entire software industry.
According to a recent analytical review by CIO Bulletin, this unusual move stems from a fascinating thesis. The creators believe artificial intelligence is currently doing to traditional software what TikTok and YouTube did to cable television, demolishing old business models. As AI agents and smart models become capable of writing code and automating workflows for free, the high-priced subscriptions that software-as-a-service (SaaS) companies rely on are suddenly looking incredibly vulnerable.
“When a model can write the code, automate the workflow, and reproduce the features people used to pay a subscription for, the software layer starts to look exposed,” noted Sylvia Jablonski, Chief Investment Officer of Defiance ETFs.
Instead of gambling on vulnerable applications, the fund shifts all its weight into the physical backbone of modern technology. By automatically removing any company that makes half or more of its revenue from software, cybersecurity, or cloud infrastructure, the remaining portfolio leans heavily into heavy-hitting hardware and connectivity.
As CIO Bulletin tracks the evolution of digital infrastructure, this strategy highlights a growing sentiment among forward-thinking market experts: the real winners of the AI revolution might not be the programs we use, but the physical chips and infrastructure that keep them running.
Everything you need to know about this news
Because AI can now generate code and replicate software features instantly. This threatens traditional subscription-based software business models, making physical hardware and microchips a safer bet for long-term growth.
It starts with the 100 largest non-financial companies on the Nasdaq and automatically disqualifies any corporation that pulls 50% or more of its revenue from software, IT services, or cybersecurity.
The strategy pivots entirely toward physical tech infrastructure. This means the portfolio is heavily concentrated in semiconductors, advanced hardware manufacturing, and global connectivity systems.
Not obsolete, but its value is shifting. When independent creators or businesses can use AI to build their own custom tools, the need to buy expensive, off-the-shelf corporate software licenses drops drastically.
In-depth corporate analysis and updates on these market-disrupting financial products are actively monitored and published by industry platforms like CIO Bulletin.
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