UBS Identifies Four Software Stocks Poised for Growth Amid Sector Slump
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy MSFT?
Source: CNBC
- Market Selectivity: UBS analysts highlight that despite the slump in software stocks in 2026 due to AI disruption fears, Microsoft, ServiceNow, Autodesk, and HubSpot are expected to thrive, indicating selective opportunities in the market.
- International Revenue Potential: These software companies not only excel in the U.S. market but also benefit from a weaker dollar, making them significant sources of international earnings and enhancing their competitiveness in the global economy.
- Valuation Advantages: UBS notes that all four recommended stocks have price-to-earnings ratios below their historical averages, while the entire software group is oversold by 6.1 standard deviations, indicating potential for a rebound.
- Positive Earnings Revisions: The quartet of recommended stocks has all received positive earnings revisions and appears decoupled from AI credit spreads, demonstrating resilience amid market volatility, particularly with Oracle's stable credit default swap rate.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 396.860
Low
500.00
Averages
631.36
High
678.00
Current: 396.860
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
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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- Market Value Increase: This acquisition led to a $124.65 million increase in IREN's quarter-end value, reflecting the dual impact of new purchases and price changes, thereby solidifying Cantor Fitzgerald's investment strategy in the digital asset sector.
- Portfolio Adjustment: Following this transaction, IREN now represents 1.99% of Cantor Fitzgerald's 13F AUM, while the firm drastically reduced its stake in CoreWeave by 86%, highlighting its focus on IREN's growth potential.
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See More
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- Value Increase: The quarter-end value of IREN's position rose by $124.65 million, reflecting both new purchases and stock price movements, suggesting Cantor Fitzgerald's optimistic outlook on IREN's future growth.
- Market Position Analysis: With a market capitalization of $13.59 billion, IREN represents only 1.99% of Cantor Fitzgerald's 13F AUM, yet its growth potential has drawn investor interest, particularly given its dependency on a contract with Microsoft.
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See More
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- Cloud Business Growth: Amazon Web Services (AWS) achieved a 24% year-over-year growth in Q4, driven by triple-digit revenue growth from its in-house designed chips, and if this growth can be sustained, Amazon will benefit significantly overall.
- Rapid Growth of Google Cloud: Google Cloud posted an astonishing 48% growth in Q4, adding $5.71 billion in revenue year-over-year, and while AWS added $6.79 billion in new business, Google Cloud's rapid expansion highlights its market potential, especially with its leading generative AI model, Gemini.
- Strong Performance of Microsoft Azure: Although Microsoft does not disclose Azure's profitability separately, its impressive 39% year-over-year growth indicates that Azure remains a key reason to own Microsoft stock, particularly with a massive $625 billion backlog for its services, reflecting a huge demand for AI computing power.
See More
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- Valuation Context: Prior to their Super Bowl win, the Seahawks were valued at approximately $7 billion, positioning this sale to potentially become one of the largest in NFL history, second only to the Washington Commanders' sale for around $6 billion in 2023, highlighting the franchise's commercial viability.
- Estate Management: The team is managed by the estate of Paul Allen, the Microsoft co-founder who owned the Seahawks since 1997 until his death in 2018, with his sister Jody Allen now serving as executor, overseeing the estate's assets and the team's future direction.
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See More
