LIVE MARKETS-Buying opportunities seen in software stocks
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BUYING OPPORTUNITIES SEEN IN SOFTWARE STOCKS
While there are risks related to artificial intelligence for software stocks, investor fears may be overblown, according to Morningstar Senior Equity Analyst Dan Romanoff.
He says in a note Wednesday afternoon that there may be "substantial upside" in certain stocks such as Microsoft MSFT.O and ServiceNow NOW.N. Those are the firm's top picks, although it sees value across most of its coverage.
"Investors looking for metrics supporting our position can focus on retention rates, which have not changed and suggest that moats are largely intact," according to the note.
He adds that "core application software that is deeply integrated within an organization and involves proprietary data is the most insulated from AI in our view."
Morningstar acknowledges the risks but the firm sees "little evidence that the bear case is unfolding."
Software industry stocks have been selling off sharply amid growing anxiety over the potential disruption caused by AI, as investors increasingly split the sector into possible winners and losers. The latest selloff was triggered by a new legal tool from Anthropic's Claude large language model. The S&P 500 software and services index .SPLRCIS is down about 3% on the session and more than 8% for the week.
(Caroline Valetkevitch)
EARLIER ON LIVE MARKETS:
CONSTRUCTIVE ENVIRONMENT FOR STOCKS BUT RISKS REMAIN - IMPAX CLICK HERE
AI CAN BE A GOLDEN TICKET ON THE RIDE TO HIGHER EARNINGS GROWTH CLICK HERE
CYBERSECURITY FIRMS MAY BE IMMUNE TO AI DISRUPTION AMID SOFTWARE SELL-OFF CLICK HERE
US STOCKS LOWER AS MEGACAPS WEIGH CLICK HERE
NASDAQ COMPOSITE TECHNICAL DAMAGE INTENSIFIES CLICK HERE
CASE FOR ECB EASING RATES NOT YET PROVEN, SAYS DEUTSCHE BANK CLICK HERE
AI WON'T EAT CYBERSECURITY, SAYS BERENBERG CLICK HERE
SOFTWARE BREATHES, MINERS SLUMP, BANKS MIXED CLICK HERE
BEFORE THE BELL: CENTRAL BANK DAY IN EUROPE, EARNINGS RUMBLE ON CLICK HERE
SKITTISH INVESTORS HAUNTED BY TECH SELL-OFF CLICK HERE
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