Are These Top Enterprise Software Stocks Worth Investing In Now?
Given that investors appear keen to buy on the current dips, could we be looking at another run ahead for tech stocks? In particular, enterprise software stocks could be a sector to note in the stock market now. After all, with news of coronavirus variants spreading nationwide, companies may not be too eager to bring their employees back to the office. Evidently, consumer tech giant Apple (NASDAQ: AAPL) is reportedly postponing its return to physical offices to October, at the earliest. In this case, enterprise software will likely continue to play a crucial role in the business world moving forward.
Furthermore, market analysts at Gartner (NYSE: IT) believe that this could give the industry more room to run. In its report on worldwide IT spending, Gartner estimates that enterprise software spending could add up to over $571 billion in 2022. Notably, this would make it the fastest-growing segment in the $4.1 trillion global IT spending market by Gartner’s estimates. Even now, some of the major names in the enterprise software space continue to gain momentum.
Take German multinational software company SAP (NYSE: SAP) for example. In its latest quarter fiscal posted yesterday, the company reported total revenue of over $7.89 billion for the quarter. Notably, the company’s cloud division raked in revenue of $2.68 billion, marking a 17% year-over-year increase. Elsewhere, cybersecurity companies such as Okta (NASDAQ: OKTA) continue to bolster their operations, increasing online security options for organizations today. This would be evident in its $6.5 billion acquisition of fellow cloud identity firm Auth0 earlier this year. Overall, as enterprises continue to rely on the software industry, I could see enterprise software stocks gaining traction among investors. With that in mind, could one of these three be top picks in the stock market today?
Best Enterprise Software Stocks To Buy [Or Sell] Ahead Of August 2021
- Salesforce.com Inc. (NYSE: CRM)
- Adobe Inc. (NASDAQ: ADBE)
- Microsoft Corporation (NASDAQ: MSFT)
Salesforce.com Inc.
Right off the bat, we will be taking a look at Salesforce. In short, the California-based software company primarily specializes in customer relationship management. On top of that, Salesforce also offers organizations a suite of enterprise applications that serve to optimize customer services, marketing automation, and analytics. Should the work-from-home trends persist, some would argue that Salesforce’s services would be vital to enterprises across the board. This would be the case as businesses will need the right tools and infrastructure in place to maintain their customer relations. In theory, this is where Salesforce comes into play with its cloud-based services.
With organizational IT spending on the rise, investors could already be eyeing CRM stock now. When you consider its latest announcement, this could very well be the case moving forward. As of yesterday, the company’s massive $27.7 billion acquisition of Slack is officially finalized. Given the rise of Slack’s workplace messaging services throughout the pandemic, this is a major win for Salesforce. CEO Marc Benioff appears more than confident about the company’s long-term growth potential. He said, “Together we’ll define the future of enterprise software, creating the digital HQ that enables every organization to deliver customer and employee success from anywhere.”
Not to mention, the company reported stellar figures across the board in its latest quarter fiscal back in May. In it, Salesforce raked in total revenue of $5.96 billion for the quarter, marking a sizable 22% year-over-year increase. Moreover, the company also saw massive year-over-year surges of 373% in net income and 354% in earnings per share. With Salesforce firing on all cylinders now, will you be adding CRM stock to your portfolio?
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Adobe Inc.
Another name to know in the hot enterprise software industry now would be Adobe Inc. For the uninitiated, it is one of the largest and most diversified software companies in the world. Now, Adobe mainly operates via its three core Creative Cloud, Document Cloud, and Experience Cloud divisions. Through its rich and diverse portfolio of software services, the company caters to a wide range of end markets. These include but are not limited to government agencies, global enterprises, creatives, and even students. All of which continue to rely on Adobe’s subscription-as-a-service offerings throughout the current pandemic.
For the most part, all this could make ADBE stock among investors looking to bet on enterprise software spending trends. If anything, the company’s shares are already sitting on gains of over 105% since its pandemic era low. So much so that it is now trading towards newer heights, hitting a record high on Wednesday’s closing bell. Regardless, Adobe does not seem to be resting on its laurels just yet. Earlier this week, the company unveiled a slew of new updates for its flagship Adobe Creative Cloud service. Among the key highlights of this update would be new integrations with Apple’s latest M1 computer chips. According to Adobe, this would provide massive speed increases in overall editing processes for Apple device users.
Furthermore, the company’s Premiere Pro subscription service will also be receiving speech-to-text and video transcript generation features this month. By and large, Adobe appears to be aware of its users’ evolving needs and continues to meet them. Because of all this, some would argue that this could translate to success for ADBE stock in the enterprise software space. Would you agree?
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Microsoft Corporation
Last but definitely not least, we have an enterprise software titan Microsoft Corporation. Now, it would be hard to make a list of the top enterprise software stocks without mentioning Microsoft. Understandably, the company’s office and computer software are one of if not the most prominent and widespread applications across the globe. From its Windows operating system (OS) and Azure cloud division to its Teams workplace instant messaging services, Microsoft brings plenty to the enterprise software table. Given all of this, I could see investors eyeing MSFT stock throughout the current tailwinds in the industry.
While all this is great, Microsoft does not seem to be slowing down anytime soon, to say the least. Throughout this month, the company has and continues to make numerous massive plays. As of this week, Microsoft is now planning to roll out its latest Windows 11 OS with Teams chat built-in. This would allow Windows PC users to access the instant messaging application by entering a simple shortcut keyboard. Why is this important? Well, not only would this improve the seamless integration between Microsoft’s core services, but it would also further incentivize general adoption of Teams.
At the same time, Microsoft is also hard at work expanding its portfolio on the cybersecurity front. As of July 12, the company is working to acquire cybersecurity start-up RiskIQ. According to current estimates, the deal could be worth upwards of $500 million. Given the recent rise in cyberattacks this year, this would mark yet another strategic play by Microsoft. All in all, Microsoft continues to refine and optimize its existing offerings while expanding its horizons. Could all this make MSFT stock worth investing in for you now?
