Software Stocks Get New Life From Strong Earnings, AI Warnings
TL;DR
Software stocks were largely written off earlier this year as investors bet that the rise of artificial intelligence would doom the business. Strong earnings and a round of AI warnings have now given the sector new life, suggesting its imminent demise was greatly exaggerated.
Nauti's Take
The rebound suggests established software companies with customers, data and distribution have more substance and potential than the AI panic trade priced in. The open question is whether growth comes from their own AI features or from sticky contracts that only change later.
Investors and buyers should look closely at usage numbers and pricing models instead of reacting to headlines in either direction.
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