IGV ETF Hit By Palantir Rout As Anthropic Reshapes AI Spending - Adobe (NASDAQ:ADBE), Salesforce (NYSE:CR

Palantir has lost over 13% in the last two days, while the IGV ETF is also down more than 5%, making it clear that being invested in high growth AI companies is amplifying downside risk for ETF investors.

As one of the top holdings of the ETF, Palantir's loss is adding to the fund's woes, which has struggled throughout the year. The ETF was down more than 24% in the last quarter, marking its worst-ever quarterly return since the global financial crisis of 2008, according to FactSet data, as software stocks broadly fell out of favor amid valuation concerns and shifting AI narratives.

AI Spending Shift Hits Software Sentiment

The core issue behind this volatility stems from growing concerns about where the value in the stack will ultimately lie. New numbers released by Ramp's AI Index indicate that Anthropic has seen accelerated adoption among enterprises, now claiming a notable portion of the incremental AI spend.

This is largely driven by the perception that firms without a proprietary AI stack and heavily dependent on third-party large language models would be outcompeted as enterprises opt for cheaper, more scalable AI solutions.

ETF Concentration Risk In Focus

The recent moves highlight the concentration risk for thematic ETFs like IGV. With top holdings such as Microsoft and Palantir driving a significant portion of returns, sharp drawdowns and negative sentiments around a few names can ripple across the entire fund.

For ETF investors, the key question now is whether IGV's exposure still captures the most lucrative parts of the AI trade, or if the center of gravity is shifting toward model providers like Anthropic, leaving traditional software players playing catch-up.

Photo: DIA TV / Shutterstock

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