Markets are in the middle of an emotional tug-of-war over artificial intelligence. On one side is excitement about productivity gains and new revenue streams; on the other is fear that AI will commoditize software, consulting, and enterprise platforms. That fear has hit several high-quality companies hard, with shares of Microsoft, Accenture, Salesforce, ServiceNow, and Adobe down between roughly 23% and 32% year-to-date. The concerns about AI disruption are real—but they are also overdone, creating a compelling long-term opportunity in some of the most profitable businesses in tech.
The Top 10’s YTD: A Tale of Energy Strength, Mega-Cap Fatigue, and Software Reset
Year-to-date performance across the S&P 100 continues to highlight a powerful market rotation—one driven less by broad bullish or bearish sentiment and more by shifting narratives, earnings durability, and valuation resets. Let’s take a look at year-to-date performance for energy, mega-caps and software—highlighting a select group of extreme performers—with lots of volatile big risks and increasingly tempting opportunities.
Software Stocks Are Cheap: Is AI Eating Software?
Briefly sharing some updated data on the absolute blood bath in software stocks as the market believes AI (such as Anthropic’s release of the legal plugin for its large language model Claude) will devour traditional software. Names like Microsoft (MSFT), ServiceNow (NOW) and Adobe (ADBE) are down big—yet still very profitable and growing. Will have more to say soon about specific names, but here is a look at 40+ top software stock ratings from Morningstar (moat ratings, BIG price upside potential and more). In a few years, you may look back and wish you bought more. Enjoy the data!
Software Application Stocks: Interest Rates, Market Rotation and 3 Attractive Opportunities
So the latest reports of cooling inflation triggered some market rotation this week, and there could be more to come. One group that may be particularly well-positioned for gains is select software application stocks. For example, the group has been underperforming the market, but the fundamentals have remained strong. In this report, we briefly review changing interest rate expectations, sector rotation, and 3 top software application stocks, especially as the AI boom proliferates beyond just phase one hardware/semiconductors).
Top 20 S&P 500 Stocks: YTD and Last 10 Years
This Attractive, High-Growth, Blue-Chip Stock Is On Sale
Now trading at only 6.4 times sales (down from over 12x in late 2021), but with an ongoing sales growth trajectory of nearly 20%, this CRM (customer relationship management) technology company has a lot of room to run (large total addressable market) and a highly defensible moat to its business. In this report, we review the business details and the risks, and then conclude with our opinion on investing (we currently own shares).
No Brainer: Own This High-Growth, Cloud-Based, CRM Juggernaut
If you like to own well-managed, high-growth, industry leaders that will likely make you a lot of money over the long-term, this cloud and subscription based Customer Relationship Management (“CRM”) company is a no brainer. The is so much to like about this business, including it large total addressable market and digital transformation trajectory, its impressive top and bottom lines, its powerful cash flow, the constant innovation, impressive acquisition track record and compelling valuation, to name a few. In this report, we review the business model, market opportunity, financials, valuation, risks, and finally conclude with some important takeaways for investors.