Is SPDR S&P Software & Services ETF (XSW) a Strong ETF Right Now?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 08 2024
0mins
Source: NASDAQ.COM
Overview of SPDR S&P Software & Services ETF (XSW): Launched in 2011, XSW is a smart beta ETF focusing on the software and services sector, with assets over $363 million and an expense ratio of 0.35%. It aims to match the performance of the S&P Software & Services Select Industry Index and has shown a year-to-date increase of approximately 4.99%.
Investment Considerations: While XSW offers diversification and potential for higher returns through non-cap weighted strategies, it carries a higher risk profile with a beta of 1.13. Investors may also explore other ETFs like Invesco AI and Next Gen Software ETF (IGPT) or iShares Expanded Tech-Software Sector ETF (IGV) for different investment strategies.
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Analyst Views on ZETA
Wall Street analysts forecast ZETA stock price to rise
14 Analyst Rating
11 Buy
3 Hold
0 Sell
Strong Buy
Current: 20.700
Low
23.00
Averages
29.00
High
44.00
Current: 20.700
Low
23.00
Averages
29.00
High
44.00
About ZETA
Zeta Global Holdings Corp. is a marketing technology company that uses proprietary data, artificial intelligence (AI) and software to create a technology platform that enables marketers to acquire, retain and grow customer relationships. The Company empowers its customers to target, connect and engage consumers through software that delivers personalized marketing across all addressable channels, including email, social media, web, chat, Connected TV and video, among others. Its Generative AI (GenAI)-driven marketing solutions enable brands to personalize experiences on a scale, measure impact with precision and optimize marketing spending to increase return on investment. Its Zeta Marketing Platform (ZMP) is an AI-powered marketing platform with identity data at its core. Leveraging GenAI and machine learning, the ZMP processes billions of structured and unstructured data signals to predict consumer intent, optimize messaging and drive personalized messaging across all channels.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Partnership with Palantir: Zeta has partnered with Palantir Technologies to build an enterprise AI infrastructure that integrates operational intelligence, customer intelligence, and marketing execution, utilizing Palantir Foundry's governance and operational infrastructure to enhance data processing capabilities.
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- New Business Intelligence Application: Zeta Global has announced the addition of business intelligence as its fourth core use case, alongside customer acquisition, retention, and monetization, aiming to enhance operational efficiency through the ZBI Engine that leverages AI for better decision-making.
- Partnership with Palantir: Zeta has partnered with Palantir Technologies to build an enterprise AI infrastructure layer that integrates operational intelligence, customer intelligence, and marketing execution, which is expected to enhance data processing capabilities and optimize marketing strategies.
- Optimistic Analyst Ratings: According to Koyfin data, 12 out of 14 analysts rate Zeta stock as a 'buy', indicating strong market confidence in its transformation into an AI infrastructure company, which could drive further stock price increases.
- Stock Price Uptrend: Zeta's stock jumped 5.4% on Monday and extended gains by 2.5% in after-hours trading, reflecting positive investor sentiment towards the company's strategic shift, with a nearly 7% increase year-to-date.
See More
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- New Business Intelligence Application: Zeta Global has announced the addition of business intelligence as its fourth core use case, alongside customer acquisition, retention, and monetization, aiming to enhance client service quality and market competitiveness through the ZBI Engine that leverages AI for better decision-making.
- Partnership with Palantir: Zeta has partnered with Palantir Technologies to build an enterprise AI infrastructure that integrates operational intelligence, customer intelligence, and marketing execution, utilizing Palantir Foundry's governance and operational infrastructure to enhance data processing capabilities.
- Stock Price Surge: Zeta Global's share price jumped 5.4% on Monday and extended gains by 2.5% in after-hours trading, reflecting positive market expectations regarding its transformation into an AI infrastructure firm, indicating strong investor confidence in future growth.
- Optimistic Retail Sentiment: According to Stocktwits, retail sentiment around Zeta is 'bullish', with discussion volume soaring 800% from the previous session, highlighting strong investor interest and confidence in the company's future performance.
See More
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- Analyst Upgrade Impact: Guggenheim's John DiFucci upgraded Salesforce and ServiceNow to Buy, arguing that the software sector's valuations had been excessively depressed, which led to a positive market reaction and a surge in related stocks.
- Significant Market Response: 8x8's stock rose by 8.5%, Zeta Global by 6.3%, and Unity by 7.1%, indicating a restoration of investor confidence in these companies, particularly after a period of AI-related market panic, suggesting strong demand for quality stocks.
- Volatility Analysis: 8x8 has experienced 57 moves greater than 5% in the past year, and while today's increase is seen as meaningful, it does not fundamentally alter market perceptions of the company, reflecting a cautious investor sentiment regarding its future prospects.
- Long-term Investment Returns: Despite an overall decline of 1.9% since the beginning of the year and trading 32.8% below its 52-week high, an investment of $1,000 in 8x8 five years ago would now yield only $67.36, highlighting the complexities of its investment risks and potential returns.
See More
Dan Ives Leaves Wedbush to Launch New Merchant Bank
- Career Transition: After eight years at Wedbush Securities, Dan Ives is launching a modern merchant bank that aims to integrate research, advisory, capital raising, and investing, marking a significant career pivot.
- Focus on AI: The new bank will concentrate on capitalizing on opportunities created by artificial intelligence and other structural shifts, demonstrating Ives' keen insight into future market trends and potential.
- Diverse Services: Ives' firm plans to offer proprietary research, strategic advisory, capital raising, and investments across sectors including technology, energy, and financials, showcasing a broad industry coverage capability.
- Ongoing Research Role: Despite his transition to banking, Ives intends to continue covering technology stocks in a research capacity, indicating his ongoing commitment and focus on the tech sector.
See More
Investment Choices Between EdTech and AI Marketing Solutions
- Duolingo's Growth Potential: In FY 2025, Duolingo reported revenue of $1 billion, reflecting a robust growth rate of approximately 38.7%, although its high customer concentration of 82% poses certain risks to its business model.
- Zeta Global's Market Performance: Zeta Global achieved nearly $1.3 billion in revenue for FY 2025, representing a year-over-year growth of about 29.7%, despite incurring a net loss of approximately $31.5 million, indicating both potential and challenges in the AI marketing sector.
- Financial Health Comparison: As of December 2025, Duolingo's current ratio stood at 2.6, showcasing strong short-term debt repayment capability, while Zeta Global maintained a current ratio of 1.6, reflecting its solid position regarding short-term liabilities.
- Risks and Opportunities: Duolingo faces revenue concentration risks from Apple and Alphabet, while Zeta Global must navigate high customer concentration and evolving data privacy regulations, requiring investors to weigh the risks against potential returns.
See More
Comparative Investment Analysis: Duolingo vs Zeta Global
- Revenue Growth Comparison: Duolingo achieved $1 billion in revenue for FY 2025, reflecting a growth rate of approximately 38.7%, while Zeta Global reported nearly $1.3 billion, growing about 29.7%, indicating strong performance in their respective sectors, although Zeta's profitability remains a concern.
- Profitability Analysis: Duolingo's net income was approximately $414.1 million, with a net margin of about 39.9%, showcasing its strong profitability; in contrast, Zeta Global reported a net loss of roughly $31.5 million, resulting in a net margin of -2.4%, indicating it has yet to achieve full-year profitability.
- Customer Concentration Risks: Duolingo relies on Apple and Alphabet for 82% of its revenue, while Zeta Global's top 10 customers account for over one-third of its total revenue, presenting potential financial risks for both companies, especially amid increasing market competition.
- Market Valuation Discrepancy: Despite both companies having market caps around $5 billion, Zeta Global trades at a significantly lower multiple than Duolingo, reflecting a conservative market outlook on its future profitability while also hinting at potential growth opportunities in the digital marketing space.
See More
