[Click eStock] "AI Rally, Signs of Expansion from Semiconductors and Servers to B2B Software"

In the wake of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) big rate cut, which has led to a rebound in growth stocks, securities analysts have highlighted the need to focus on the artificial intelligence (AI)-related software sector as a global equity strategy.

On the 26th, Oh Han-bi and Shim Ji-hyun, researchers at Shinhan Investment Corp., stated, "The counterattack of growth stocks has begun under the pretext of the big cut. Since the beginning of this month, the software sector's stock price has risen by 3.8%, making it the fastest-moving within the information technology (IT) sector," they said.

The software sector has not received much attention during the AI upswing until now. Until the first half of the year, only mega-cap semiconductor and server stocks, which correspond to AI infrastructure, were highlighted, but recently, leading stocks have emerged in the software sector as well. The stock prices of thematic exchange-traded funds (ETFs) related to sub-sectors such as cloud and cybersecurity are also showing positive trends.

The reasons for the recent rapid rebound in software stock prices include ▲resolution of macroeconomic uncertainties such as interest rate cuts ▲positive earnings centered on leading stocks ▲the end of the tightening trend among client companies, among others. Researchers Oh Han-bi and Shim Ji-hyun noted, "In the past, hardware innovation and dissemination triggered the growth of the software market, but now, led by big tech (large information technology companies), there is a strong willingness to invest despite high costs." They added, "There are signs that strength is first spreading to the B2B software sectors such as cloud, AI solutions, and data management and analytics due to corporate demand for AI cloud construction."

The top preferred stocks are Oracle (ORCL) and Palantir (PLTR). Oracle stands out for balanced growth in Infrastructure as a Service (IaaS) and Software as a Service (SaaS), while Palantir is evaluated as a company with high revenue visibility in both the private and government sectors due to the full-scale expansion of its AI-based data analytics platform. Researchers Oh Han-bi and Shim Ji-hyun explained, "Oracle's cloud revenue has grown significantly as demand for cloud infrastructure services surged, indicating that Oracle's cloud solutions are essential in the AI model training and deployment process," and "Palantir's strong demand for its platform has driven its performance."

They added, "The adoption of AI technology is directly contributing to the earnings of software companies, centered on cloud and data analytics solutions," and "the pace of profit improvement among software companies is surpassing that of the S&P 500. For investors considering an extension of the AI bull market, this is a good time to actively explore long-term investment opportunities."

This content was produced with the assistance of AI translation services.