Group 1: Market Sentiment and Focus - The European software sector is experiencing a sharp sell-off, leading to a search for stabilizing factors, with SAP's upcoming earnings report being a focal point for market sentiment [1] - Morgan Stanley analysts expect core software companies to report solid Q4 data despite ongoing concerns about generative AI, which has weakened investor sentiment [1][3] - Barclays previously indicated that the earnings season may not serve as a positive turning point for market sentiment, citing fears over AI's disruptive potential and unsustainable capital expenditures by large cloud service providers [1] Group 2: SAP's Performance Expectations - Morgan Stanley's data highlights that the market is focused on whether SAP can deliver on its high growth promises for cloud business, with expected cloud revenue growth of 26% to 28% year-over-year [3] - SAP's total revenue is projected to be between €33.1 billion and €33.6 billion, with non-IFRS EBIT expected to reach €10.3 billion to €10.6 billion, reflecting a year-over-year growth of 26% to 30% [3] - Morgan Stanley maintains a positive outlook on SAP, emphasizing that achieving its mid-term goals could instill much-needed confidence in the software sector [3] Group 3: Payment and Fintech Sector Dynamics - The payment and fintech sectors are showing increasing divergence, with companies like Wise demonstrating acceleration in growth, while others like Worldline face transformation risks [2][4] - Morgan Stanley is optimistic about Adyen, viewing it as a structural winner with growth acceleration potential, while Worldline is rated underweight due to execution risks in its transformation plan [4] Group 4: Performance Disparities in Tech Stocks - In the IT services and hardware sectors, significant performance disparities are noted, with Computacenter showing strong growth and exceeding profit expectations [5] - Morgan Stanley adopts a cautious stance on Oracle, citing potential revenue opportunities from GPUaaS but also highlighting risks related to infrastructure costs and financing needs [6] - The firm advises investors to focus on companies demonstrating resilient growth and not adversely affected by structural technological changes like generative AI [6]

Summary of Global Software Conference Call Industry Overview - The software industry is experiencing a significant shift in focus from macroeconomic concerns to the disruptive rise of AI, with investor discussions centered around whether an AI bubble exists and the potential impact of AI on enterprise software [1][11][15]. Key Themes for 2026 - **Valuation Reset**: Software valuations have halved over the past year, creating opportunities to acquire high-quality stocks at discounted prices [14][31]. - **IT Spending Outlook**: Recent CIO surveys indicate one of the strongest IT spending outlooks since 2018, with expectations for a stable macro environment and lower interest rates supporting demand, particularly among small and medium-sized businesses (SMBs) [3][13][23]. - **Generative AI Impact**: While Generative AI is a major topic, its revenue impact on most software companies is still limited. The expectation is that significant revenue generation from AI will not materialize until 2027 or later [6][19][22]. Company-Specific Insights - **Top Picks**: Recommended stocks include Oracle, Microsoft, SAP, and HubSpot, all rated as Outperform. MongoDB is also favored for its long-term potential and near-term momentum [4][7][25][26]. - **Cautionary Stocks**: Salesforce is expected to underperform due to concerns over AI disruption and market saturation. Snowflake is rated as Market-Perform, with long-term growth prospects viewed as uncertain [4][7][29][30]. Financial Metrics - **Valuation Comparisons**: - Adobe (ADBE): Current price $296.12, target $506.00, adjusted P/E 12.0 for 2026E. - Microsoft (MSFT): Current price $459.86, target $645.00, adjusted P/E 27.5 for 2026E. - Oracle (ORCL): Current price $191.09, target $339.00, adjusted P/E 25.9 for 2026E. - Salesforce (CRM): Current price $227.11, target $223.00, adjusted P/E 19.2 for 2026E [5][8]. Investment Implications - **SMB vs. Enterprise**: SMB-focused software companies may see earlier revenue recovery compared to enterprise-focused firms, as SMBs typically rebound faster in improving economic conditions [6][23]. - **AI Revenue Generation**: The expectation is that while AI will contribute to revenue growth, it will be limited in 2026, with only a few companies likely to see a significant positive impact [19][20]. Macro Considerations - **Economic Stability**: The macroeconomic environment is expected to remain stable, with potential benefits from deregulation and tax cuts in the U.S. [3][23]. - **Geopolitical Risks**: Ongoing global conflicts and geopolitical tensions may continue to impact market sentiment and investment strategies [21][23]. Conclusion - The software sector is at a pivotal moment, with significant opportunities arising from valuation resets and a favorable IT spending outlook. However, the impact of Generative AI remains uncertain, and investors are advised to focus on company-specific fundamentals while being cautious of potential disruptions in the market.

Group 1 - Investors are increasingly pessimistic about the future of software companies as the AI revolution progresses, leading to a decline in stock prices for companies like Adobe, Salesforce, and Intuit [1] - The focus on sustained profitability, characterized by strong margins, stable and expanding free cash flow, and high returns on invested capital, is emphasized as a more reliable driver of returns than valuation alone [1] - The article highlights the importance of managing investments wisely to ensure financial freedom and the ability to work in a fulfilling environment [1]

Company Overview - Shares in SAP have fallen to their lowest level since August 2024, with a market value loss of approximately $130 billion since last year's peak [1] - The current valuation of SAP is about 233 billion euros ($273 billion), down from a lifetime high of 344 billion euros in February 2025 [2] Market Sentiment - The decline in SAP's stock is part of a broader selloff affecting software stocks in Europe and the U.S., driven by concerns over AI disruption [1] - Analysts remain generally optimistic about SAP, despite the negative sentiment in the software sector, which is described as being at a historical low [4] Financial Performance - SAP has forecasted full-year cloud revenue at the lower end of its outlook range, while operating profit is expected to be at the upper end [4] - The S&P 500 software index has experienced a 7.2% decline so far in 2026, indicating a challenging environment for software companies [5] Strategic Considerations - Concerns have been raised regarding the potential decrease in the average selling price of SAP's services due to AI making modules easier to develop and replicate [3] - It is crucial for SAP to accelerate its transition to cloud services to address market concerns about the value of its offerings [2]

Core Viewpoint - Shares in Germany's SAP have continued a months-long downtrend, reaching their lowest point since August 2024, with a total market value loss of approximately $130 billion since last year's record high [1] Group 1 - SAP's stock price decline has been significant, indicating ongoing challenges for the company [1] - The current market value loss reflects a substantial decrease from previous highs, highlighting investor concerns [1]

Summary of Global Software Conference Call Industry Overview - The software industry is experiencing a significant shift in focus from macroeconomic concerns to the disruptive rise of AI, with investor discussions centered around whether an AI bubble exists and the potential impact of AI on enterprise software [1][11][15]. Key Themes for 2026 - **Valuation Reset**: Software valuations have halved over the past year, creating opportunities for investors to acquire high-quality stocks at discounted prices [14][31]. - **IT Spending Outlook**: Recent CIO surveys indicate one of the strongest IT spending outlooks since 2018, with expectations for a stable macro environment and lower interest rates supporting demand, particularly among small and medium-sized businesses (SMBs) [3][13][23]. - **Generative AI Impact**: While Generative AI is a major topic, its actual revenue impact on software companies is still limited. Most companies are not yet seeing significant revenue from AI, and the focus is shifting towards company-specific opportunities [6][15][19]. Company Recommendations - **Buy Recommendations**: - **Oracle (ORCL)**: Strong core business with significant cloud transition and market share gains in IaaS/PaaS, driven by unique offerings [4][27]. - **Microsoft (MSFT)**: Durable business with multiple growth levers and a reset valuation, positioned well for AI monetization [4][27]. - **SAP (SAP)**: Consistent double-digit revenue growth and margin improvement, despite AI cycle noise [4][27]. - **HubSpot (HUBS)**: Attractive entry point with strong SMB market positioning and potential benefits from AI adoption [4][27]. - **Cautionary Recommendations**: - **Salesforce (CRM)**: Concerns over underperformance and potential reliance on acquisitions to drive growth [4][29]. - **Snowflake (SNOW)**: Long-term growth concerns due to market saturation and competitive pressures [4][30]. - **Workday (WDAY)**: Growth deceleration and investor skepticism regarding AI's impact on its business model [4][28]. Financial Metrics - **Valuation Comparisons**: - Adobe (ADBE): Adjusted P/E ratios have decreased significantly, with a current valuation of 12.0x for 2026E [5][32]. - Microsoft (MSFT): Current P/E at 27.5x for 2026E, reflecting a reset from previous highs [5][32]. - Oracle (ORCL): Trading at a 0.9x PEG ratio, down from 1.4x a year ago, indicating a significant valuation adjustment [32]. Macro Considerations - **Economic Environment**: The macroeconomic landscape is expected to stabilize, with potential benefits from deregulation and tax cuts in the U.S. impacting SMB spending positively [6][23]. - **AI Adoption Timeline**: Enterprise adoption of AI is anticipated to take longer than expected, with significant visibility likely not occurring until 2027 or 2028 [22][23]. Conclusion - The software sector is at a pivotal moment, with significant valuation resets providing investment opportunities. However, the actual impact of AI on revenue generation remains uncertain, necessitating a cautious approach to investment in this space. The focus should be on companies with strong fundamentals and clear growth trajectories amidst the evolving landscape of AI and macroeconomic conditions [1][14][19].

Group 1 - European equities have experienced a strong performance over the past year, but not all companies have benefited equally, with SAP SE down 10% in the last 12 months [1] - SAP SE's performance significantly lags behind the Vanguard FTSE, indicating potential underperformance in the market [1] Group 2 - The article does not provide any additional relevant content regarding industry or company analysis beyond the performance of SAP SE [2][3]

Group 1 - European equities have experienced a strong performance over the past year, but not all companies have benefited equally, with SAP SE down 10% in the last 12 months [1] - SAP SE's performance has significantly lagged behind the Vanguard FTSE, indicating potential challenges for the company in the current market environment [1]

Core Viewpoint - The current stock market cycle is significant, and companies like SAP and its software peers may face challenges during this period [1] Group 1 - The investment strategy focuses on identifying companies with strong qualitative attributes and purchasing them at favorable prices based on their fundamentals [2] - The portfolio management approach aims to minimize losses while maximizing exposure to high-potential winners, often resulting in a 'Hold' rating for companies that do not meet growth or risk thresholds [2] Group 2 - There is no current investment position in any of the companies mentioned, and there are no plans to initiate such positions in the near future [3] - The article reflects the author's personal opinions and is not influenced by any compensation from the companies discussed [3]

Market Overview - The global Cognitive Analytics Market was valued at USD 7.90 billion in 2025 and is projected to reach USD 81.46 billion by 2033, with a CAGR of 33.99% from 2026 to 2033 [1] - The U.S. Cognitive Analytics Market was valued at USD 2.17 billion in 2025 and is expected to grow to USD 22.03 billion by 2033, with a CAGR of 33.61% from 2026 to 2033 [3] Growth Drivers - The market is expanding due to increasing demand for data-driven decision-making, real-time insights, and the growing acceptance of AI and machine learning across various industries [1][3] - Factors contributing to the U.S. market growth include high AI adoption, advanced digital infrastructure, robust business expenditures, and cloud integration [3] Segmentation Analysis By Enterprise Type - Large Enterprises held a 61% market share in 2025, driven by large data volumes and complex business processes, while small and medium enterprises are expected to grow the fastest from 2026 to 2033 due to lower entry barriers from cloud-based solutions [4] By Application - Customer Management accounted for 31% of the market share in 2025, focusing on enhancing customer experience and retention, while Fraud Detection and Security is anticipated to grow the fastest from 2026 to 2033 due to increasing cyber threats [5] By End-User - The BFSI sector dominated with a 28% share in 2025, relying heavily on advanced analytics for fraud prevention and risk assessment, while Retail is expected to experience the fastest growth from 2026 to 2033 as companies leverage cognitive analytics for demand forecasting and personalized promotions [6][7] By Deployment - Cloud deployment led with a 64% market share in 2025 and is projected to grow at the fastest rate from 2026 to 2033, attributed to its scalability and cost efficiency [8] Regional Insights - North America held the largest revenue share of approximately 38% in 2025, benefiting from early AI adoption and a strong presence of major technology providers [9] - The Asia Pacific region is expected to grow at the fastest CAGR of about 15.22% from 2026 to 2033, driven by rapid digital transformation and increasing AI investments [10] Market Trends - There is a rising enterprise focus on data-driven decision-making using AI-powered insights, which enhances operational efficiency and competitive advantage through real-time analysis of consumer behavior and market trends [11] Key Players - Major companies in the cognitive analytics market include Google LLC, Oracle Corporation, IBM Corporation, Microsoft Corporation, and Amazon Web Services, among others [13]