Software Stocks Rebound as Investors Look Toward Third-Quarter Results
Software stocks and the IGV index gained 21% since June’s end, while a JPMorgan strategist expects earnings and AI monetization to support momentum.
Key takeaways
- Software stocks and the IGV index rose 21% since the end of June, compared with 4% for the S&P 500.
- JPMorgan’s Samik Chatterjee expects infrastructure software companies to lead into year-end.
Software stocks and the IGV index rose 21% since the end of June, compared with a 4% gain for the S&P 500. JPMorgan strategist Samik Chatterjee cited the figures as the sector recovered from a selloff driven by fears that AI firms would undermine software-as-a-service businesses.
Paycom, DocuSign, Workday, Salesforce, Cloudflare, Twilio and Microsoft were among the top performers. Chatterjee said a revaluation of multiples across infrastructure and application software helped the broader rally.
Chatterjee expects the momentum to continue into year-end as investors assess third-quarter earnings. He sees infrastructure software companies leading, with AI tailwinds supporting strong revenue and earnings results, though gross margins may be only in line with expectations.
He also expects application software companies to join the positive share-price trend. Chatterjee pointed to anticipated increases in full-year guidance and growing AI monetization as additional revenue alongside core businesses. Growth among the companies he covers ranges from modestly decelerating to stable.
This article was produced with the help of AI technology. Source: Yahoo Finance
