A well-known Wall Street analyst has picked out CrowdStrike, Microsoft and Snowflake among five software stocks to own amid the current “software apocalypse”.
In a research note published last Wednesday, Wedbush’s global head of technology research, Dan Ives, acknowledged that software has become a “Do Not Enter” zone for investors amid growing fears of how AI could disrupt the sector.
The S&P 500 index shed around $1tn in market value in late January and early February, with Microsoft, Amazon andGoogle losing $900bn alone in the wake of their latest round of earnings calls, TechMarketView reported.
But there are also “winners and opportunities” in the software space, Wedbush claimed as he singled out CrowdStrike, Microsoft, Snowflake, Salesforce and Palantir for success.
According to Ives and his Wedbush colleagues, one concern is that AI will continue to take more share of seat-based models following the latest update from Anthropic.
That view was echoed by TechMarketView analysts Georgina O’Toole & Simon Baxter.
“AI is actively dismantling traditional tech supplier models as we write. Per-seat software pricing breaks down when AI agents can perform tasks without users logging into applications,” they wrote in a UKHotViews newsletter post on Friday.
“Major head scratcher”
Ives, however, called the magnitude of the recent software sell-off a “major head scratcher”, claiming it reflects an “Armageddon scenario for the sector that is far from reality in our view”.
“We believe the market is baking in a doomsday scenario for software companies in the near-term, which we believe is extremely overblown, as many customers won’t be willing to put their data at risk to capitalise on AI implementation strategies until there is less risk with these migration projects,” Ives said, according to Seeking Alpha.
CrowdStrike’s position as “the gold standard of cybersecurity remains firmly unchanged”, Ives and his team wrote as they ran through their software picks.
“CrowdStrike’s role is industry agnostic in the sense that AI is disrupting the entire playing field, but the need to secure workloads and operations from AI continues to be essential, especially as usage is set to significantly increase,” they added.
Snowflake is positioned as “the trusted layer between enterprise data and external models like Anthropic, further reinforcing [its] position as an AI winner moving forward,” the analysts went on to add.
Microsoft is “on its way to accelerating cloud and AI monetisation”, meanwhile, they added.
“While Anthropic has seen significant advancements in model performance and integrations, [Microsoft] is installing these capabilities across its massive enterprise install base within its 365 ecosystems looking for a trusted distribution of new AI systems, with many enterprises still in the early stages of embedding AI into their data across the MSFT tech stack,” they wrote.
