Software Stocks Are Up Nearly 40% Since the 'SaaSpocalypse' Bottom. Ways to Play the Sector
AI monetization is slower and patchier at the level of consumer-facing applications.
TL;DR
- The software sector has recovered nearly all its stock market value after an AI-driven downturn, termed the 'SaaSpocalypse'.
- The IGV software ETF is up nearly 40% from its April lows, and State Street's XSW software ETF reached a new high.
- Analysts suggest software's distinct capital assets and 'sticky workflows' offer durable advantages against AI.
- Data platforms and cybersecurity are considered better investment bets than consumer-facing applications due to AI monetization patterns.
- Snowflake and Palo Alto Networks are highlighted as companies benefiting from AI integration and strong financial results.
- Companies like Doximity have seen significant stock increases due to the ROI of their AI search tools.
- Older software companies like Salesforce are emphasizing their complementary relationship with AI developers like Anthropic.