These 4 Top Software Stocks Are In Focus Right Now
Just as investing in tech stocks has not been as smooth sailing in the stock market this year, software stocks share the same fate. However, should this sway you from investing in software companies? This volatility would likely not be permanent and should you look long term, this could work in your favor. We are all surrounded by software in today’s world. From our laptops to mobile devices, they all run on software with multiple integrated functions. However, what fuels the top line for software stocks? It is the increased spending on cloud computing, digital transformation, and artificial intelligence that drives the growth of software stocks.
In fact, some of the largest IPOs from 2020 were software/tech companies. For example, we have Snowflake (NYSE: SNOW) and Palantir Technologies (NYSE: PLTR). Ever since its IPO, both companies have shown positive financial figures. In their most recent quarters, Palantir’s revenue grew 49% year-over-year to $341 million.
On the other hand, Snowflake’s revenue was $190.5 million, representing 117% year-over-year growth. However, their rather lackluster recent stock performance could suggest that such growth may have already been priced in. Nevertheless, could this be a buying opportunity with the current weakness in the sector? If so, let us look at some of the top software stocks in the stock market today.
Software Stocks In To Buy [Or Sell] Today
- Salesforce.com, Inc. (NYSE: CRM)
- Oracle Corporation (NYSE: ORCL)
- Microsoft Corporation (NASDAQ: MSFT)
- PTC Inc (NASDAQ: PTC)
Salesforce.com, Inc
First up, we have the leading customer relationship management (CRM) platform, Salesforce. The company primarily focuses on cloud, mobile, social, Internet of Things, and artificial intelligence technologies. Its cloud-based CRM applications do not require IT experts to set up or manage. Just a simple login and its clients could start connecting with customers worldwide. As of today, there are more than 150,000 companies that utilize Salesforce CRM to grow their business by enhancing customer relationships.
On Tuesday, Salesforce led a new funding round in Israeli cybersecurity startup Wiz. It appears that the company has raised more than $120 million from investors. This is important as hackers are getting more sophisticated by the day. Hence, the demand for cybersecurity for cloud-based services is higher than ever now.
With Salesforce scheduled to report its first-quarter earnings today, this would be a good opportunity to review CRM stock performance. Although it has been up by almost 30% over the past year, the stock has been relatively flat since the start of the year. During the previous quarter ended January 31, 2021, revenue was $5.82 billion, an increase of 20% year-over-year. So, would you buy CRM stock ahead of its earnings report?
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Oracle Corporation
Oracle is a provider of products and services that addresses enterprise information technology environments worldwide. The company’s businesses include cloud and on-premise software, hardware, and services. ORCL stock has been on a bullish trend over the past year, rising by almost 50% during this period. After such an impressive rally, are there reasons to believe that this momentum could be sustained? Fortunately, it appears that several recent developments could potentially suggest so.
Last week, Oracle was selected by DISH Wireless (NASDAQ: DISH) to enable a Service-Based Architecture (SBA) for its 5G core. And today, the company also announced that its first Arm-based compute offering, OCI Ampere A1 Compute, is available on Oracle Cloud Infrastructure (OCI). So how is this significant? Well, customers can now run cloud-native and general-purpose workloads on Arm-based instances with better price-performance benefits.
Earlier this month, Oracle announced the world’s first ad measurement technology for 3D in-game environments. In detail, the latest updates include impressions delivery and General Invalid Traffic measurement. Essentially, advertisers can now better measure whether an ad was indeed served to a human and detect any fraudulent ad activity inside games. With all these exciting developments, would you be riding on the momentum of ORCL stock?
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Microsoft Corporation
Next up, we have the company with the second-largest market cap in the U.S., Microsoft. For those who are unfamiliar, the company develops and sells computer software, electronics, personal computers, and related services. Its segments include Productivity and Business Processes, Intelligent Cloud, and Personal Computing.
Last Wednesday, LaLiga, Spain’s premier football association, and Microsoft announced an expansion of their partnership focused on digitally transforming the sports experience globally. The companies will also collaborate on developing technology solutions for the media and entertainment industry through LaLiga’s technology offering, LaLiga Tech. This deepens their engagement with millions of people around the world, while potentially bringing new business models to the market with Microsoft’s cloud and AI capabilities.
To top it off, the company’s financials have also been admirable. Last month, it announced its third-quarter financials. Revenue for the quarter was $41.7 billion, an increase of 19% year-over-year. Operating income was up by 31%, at $17 billion. Microsoft also posted a net income of $15.5 billion, an increase of 48% compared to a year earlier. So, would you consider investing in MSFT stock if you have not already?
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PTC Inc
PTC provides software solutions and services that aid manufacturing companies in the design, operation, and management of products. Its offerings include high-end computer-assisted design software (Creo) and product lifecycle management software (Windchill), in addition to internet-of-things (IoT) and augmented reality (AR) industrial solutions. From hospital equipment with increased uptime to more sustainable buildings and manufacturing, the company’s tech plays a part.
The potential growth of PTC is looking bright as the company is making the most out of the increased adoption of computer-based design in the automotive sector. This along with the increasing demand for precision in design and digitalization of construction should propel the demand for its Creo 3D CAD offering in the automotive, aerospace, manufacturing, and defense spaces. Therefore, this would explain why most analysts have a certain level of expectation for the company’s growth over the next few years.
Lastly, let us briefly touch on its financials. For the six months ended March 31, 2021, the company’s revenue hiked by 24% to $890.8 million. While net income climbed from $42.6 million to $132.8 million, which represents a whopping 311% increase. So, if you’re looking for a software company with strong potential, it appears PTC stock could be one of the better bets.
