Stocks within mid-cap software that will likely see outperformance amid soft backdrop – GS
Market Analysis: Goldman Sachs analysts highlight opportunities in select software stocks despite a general decline, with small and mid-cap software down 18% year-to-date. Companies like BlackLine, OneStream, and Vertex are seen as potential growth leaders.
Sector Insights: Vertical software sectors such as healthcare and bank technology are expected to perform well due to stable demand, with companies like Guidewire and nCino identified as likely outperformers amid macroeconomic pressures.
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Freight Brokers Fall to AI Disruption: Which Other Stocks Remain Secure?
- Freight Brokers and AI: Freight brokers, once seen as beneficiaries of artificial intelligence, are now facing challenges from software companies leveraging AI technology.
- Shift in Perception: The shift in perception highlights the evolving landscape of the freight industry as AI continues to advance and disrupt traditional roles.
- Impact on the Industry: This change suggests that freight brokers may need to adapt to remain competitive in an increasingly automated environment.
- Future Considerations: The situation raises questions about the long-term implications of AI on various sectors within the logistics and transportation industries.
Tech ETF XLK Poised for Its Longest Rally Since 2020: Here's What You Need to Know
ETF Performance: The SPDR S&P Information Technology ETF (XLK) has achieved a 10-day winning streak, gaining 3.5% last week, driven by stocks like NVIDIA and other chipmakers, rather than mega-cap tech companies like Meta and Alphabet.
Semiconductor Market Growth: The World Semiconductor Trade Statistics (WSTS) forecasts a 25% growth in the global semiconductor market for 2026, reaching $975 billion, with memory and logic sectors leading the growth.
Software Market Expansion: The global software market is projected to grow from $823.9 billion in 2025 to approximately $2.25 trillion by 2034, fueled by advancements in AI, cloud computing, and cybersecurity.
Investment Opportunities: The VanEck Semiconductor ETF (SMH) and State Street SPDR S&P Software & Services ETF (XSW) are highlighted as strong investment options, with SMH rated as a "Strong Buy" and XSW as a "Buy" according to Zacks.
Is Investing in the State Street SPDR S&P Software & Services ETF (XSW) a Good Idea?
Overview of XSW ETF: The State Street SPDR S&P Software & Services ETF (XSW) is a passively managed fund launched in 2011, focusing on the Technology - Software segment, with assets over $444.42 million and an expense ratio of 0.35%.
Performance and Risk: XSW has a beta of 1.15 and a standard deviation of 24.89%, indicating high risk, with a 12-month trailing dividend yield of 0.06% and a year-to-date increase of 1.51%, despite a 4.03% decline over the past year.
Investment Strategy: The ETF aims to match the performance of the S&P Software & Services Select Industry Index, which represents the software sub-industry of the S&P Total Stock Market Index, and holds about 97.1% of its portfolio in the Information Technology sector.
Comparison with Other ETFs: Other ETFs in the space include Invesco AI and Next Gen Software ETF (IGPT) and iShares Expanded Tech-Software Sector ETF (IGV), which have higher assets and slightly different expense ratios, providing additional options for investors.
Zacks Analyst Blog Spotlights XLK, IYW, KNCT, RSPT, XSW, FITE, and IGPT
Consumer Spending Trends: A recent Deloitte survey indicates that consumers plan to spend an average of $622 during the holiday shopping period, a 4% decrease from last year, primarily due to rising living costs and financial pressures.
Market Outlook for Tech ETFs: Amid concerns over economic conditions and inflation, analysts suggest that undervalued tech ETFs may present attractive investment opportunities, especially as major tech stocks have seen significant fluctuations in recent months.
AI Market Risks: Investment caution is advised in the AI sector due to interconnectedness among major players, which could heighten vulnerability if an AI bubble bursts, despite strong financial backing for these companies.
Zacks Investment Insights: Zacks Investment Research highlights several tech ETFs with lower valuations compared to the broader market, encouraging investors to consider these options as part of their portfolio strategy.
This chart illustrates the poor performance of Strategy's stock since the peak of bitcoin.
Bitcoin's Recent Decline: Bitcoin has fallen below $100,000 for the first time in months and has entered a bear market.
Strategy's Continued Investment: Despite the downturn in bitcoin's value, Strategy has increased its investment by making its largest bitcoin purchase in over three months.
ETFs Focused on AI Software Present Long-Term Investment Potential
Growth Potential of AI in Software: The rise of artificial intelligence (AI) is expected to significantly enhance the role of software companies, with analysts suggesting that current market downturns may present attractive investment opportunities for long-term investors.
AI Software vs. Hardware Demand: Unlike AI hardware, which is typically a one-time sale, AI software is sold on a subscription basis, ensuring a steady demand and higher profit margins, while the emerging concept of hardware-as-a-service (HaaS) offers new business models that integrate hardware, software, and services.
Freight Brokers Fall to AI Disruption: Which Other Stocks Remain Secure?
- Freight Brokers and AI: Freight brokers, once seen as beneficiaries of artificial intelligence, are now facing challenges from software companies leveraging AI technology.
- Shift in Perception: The shift in perception highlights the evolving landscape of the freight industry as AI continues to advance and disrupt traditional roles.
- Impact on the Industry: This change suggests that freight brokers may need to adapt to remain competitive in an increasingly automated environment.
- Future Considerations: The situation raises questions about the long-term implications of AI on various sectors within the logistics and transportation industries.
Tech ETF XLK Poised for Its Longest Rally Since 2020: Here's What You Need to Know
ETF Performance: The SPDR S&P Information Technology ETF (XLK) has achieved a 10-day winning streak, gaining 3.5% last week, driven by stocks like NVIDIA and other chipmakers, rather than mega-cap tech companies like Meta and Alphabet.
Semiconductor Market Growth: The World Semiconductor Trade Statistics (WSTS) forecasts a 25% growth in the global semiconductor market for 2026, reaching $975 billion, with memory and logic sectors leading the growth.
Software Market Expansion: The global software market is projected to grow from $823.9 billion in 2025 to approximately $2.25 trillion by 2034, fueled by advancements in AI, cloud computing, and cybersecurity.
Investment Opportunities: The VanEck Semiconductor ETF (SMH) and State Street SPDR S&P Software & Services ETF (XSW) are highlighted as strong investment options, with SMH rated as a "Strong Buy" and XSW as a "Buy" according to Zacks.
Is Investing in the State Street SPDR S&P Software & Services ETF (XSW) a Good Idea?
Overview of XSW ETF: The State Street SPDR S&P Software & Services ETF (XSW) is a passively managed fund launched in 2011, focusing on the Technology - Software segment, with assets over $444.42 million and an expense ratio of 0.35%.
Performance and Risk: XSW has a beta of 1.15 and a standard deviation of 24.89%, indicating high risk, with a 12-month trailing dividend yield of 0.06% and a year-to-date increase of 1.51%, despite a 4.03% decline over the past year.
Investment Strategy: The ETF aims to match the performance of the S&P Software & Services Select Industry Index, which represents the software sub-industry of the S&P Total Stock Market Index, and holds about 97.1% of its portfolio in the Information Technology sector.
Comparison with Other ETFs: Other ETFs in the space include Invesco AI and Next Gen Software ETF (IGPT) and iShares Expanded Tech-Software Sector ETF (IGV), which have higher assets and slightly different expense ratios, providing additional options for investors.
Zacks Analyst Blog Spotlights XLK, IYW, KNCT, RSPT, XSW, FITE, and IGPT
Consumer Spending Trends: A recent Deloitte survey indicates that consumers plan to spend an average of $622 during the holiday shopping period, a 4% decrease from last year, primarily due to rising living costs and financial pressures.
Market Outlook for Tech ETFs: Amid concerns over economic conditions and inflation, analysts suggest that undervalued tech ETFs may present attractive investment opportunities, especially as major tech stocks have seen significant fluctuations in recent months.
AI Market Risks: Investment caution is advised in the AI sector due to interconnectedness among major players, which could heighten vulnerability if an AI bubble bursts, despite strong financial backing for these companies.
Zacks Investment Insights: Zacks Investment Research highlights several tech ETFs with lower valuations compared to the broader market, encouraging investors to consider these options as part of their portfolio strategy.
This chart illustrates the poor performance of Strategy's stock since the peak of bitcoin.
Bitcoin's Recent Decline: Bitcoin has fallen below $100,000 for the first time in months and has entered a bear market.
Strategy's Continued Investment: Despite the downturn in bitcoin's value, Strategy has increased its investment by making its largest bitcoin purchase in over three months.
ETFs Focused on AI Software Present Long-Term Investment Potential
Growth Potential of AI in Software: The rise of artificial intelligence (AI) is expected to significantly enhance the role of software companies, with analysts suggesting that current market downturns may present attractive investment opportunities for long-term investors.
AI Software vs. Hardware Demand: Unlike AI hardware, which is typically a one-time sale, AI software is sold on a subscription basis, ensuring a steady demand and higher profit margins, while the emerging concept of hardware-as-a-service (HaaS) offers new business models that integrate hardware, software, and services.
