Key insights
- The author expresses bullish sentiment on enterprise software (Autodesk, Applovin, Salesforce, Servicenow, Veeva Systems), citing attractive valuations (PEG ratio), substantial buybacks, insider buying, and positive analyst coverage. They highlight the sector's recent outperformance relative to the Nasdaq and S&P 500, suggesting a potential trade opportunity. Robert Smith's view on AI as a tailwind for the sector further supports the bullish outlook.
Sources vary on the exact numbers, but these 5 large cap tech companies are all high margin with double digit growth.
They have PEGs between .85 and 1.22. As a basket, it’s a 1.03 PEG, with net cash.
Last quarter they announced over $62 billion in buybacks, with net insider buying.
They’re widely covered, with high profile strategists Stephanie Link (a killer), Tom Lee, & Dan Ives all vocally bullish on multiple of them.
They’re down 36-50% from their 52 weeks highs, about 39% as a basket. A gobsmacking, double bear market level selloff.
But the real story is the recent relative outperformance. They are all UP from their February intraday lows. They are up between 2.5 and 10.4%. As a basket, it’s about 4% up vs. Nasdaq down around 9%. 4 out of 5 are up today, between 1.95 and 5.59%. Nasdaq is down .73%, S&P is down .39%.
I will put Vista Partners Robert Smith’s CNBC interview in the comments. He breaks down how increased efficiencies from AI should provide a tailwind, not a drag, for the sector, and how enterprise architecture is necessary for early stage AI deployment.
The companies are Autodesk (ADSK), Applovin (APP), Salesforce (CRM), Servicenow (NOW), and Veeva Systems (VEEV).
So I really like enterprise software for a trade lol. Happy hunting!