AI Bust or a Once-in-a-Decade Buying Opportunity for This Software Stock?

Core Viewpoint - PTC presents a compelling investment opportunity despite recent stock price pressures, attributed to a shift in investor focus towards AI-related companies and concerns about AI's impact on industrial software [1][2]. Company Overview - PTC is a leader in product lifecycle management (PLM) and computer-aided design (CAD) software, facilitating the creation of a digital thread for products throughout their lifecycle [4]. - The company's preferred metric, Annual Run Rate (ARR), reflects the annualized value of its active subscription software and contracts, which is crucial for revenue and cash flow [5]. Financial Performance - PTC's ARR growth is forecasted to slow to 7.5% to 9.5% in fiscal 2026, a significant decline from previous mid-teens growth expectations [6]. - The stock has declined by 10% over the past year, which is seen as a reaction to the slowing ARR and AI-related market concerns [2][6]. AI Integration - AI is viewed as a major opportunity for PTC rather than a threat, as the company is embedding AI into its existing systems to enhance value [8][9]. - Customers prefer AI to be integrated into trusted systems rather than as standalone solutions, aligning with PTC's strategic focus [9]. Future Outlook - Management anticipates a significant increase in ARR starting in Q4 of fiscal 2026, driven by large deals not yet reflected in current ARR figures [10]. - PTC's restructured go-to-market strategy aims to secure larger enterprise deals, enhancing its market position [11]. - The company expects to achieve $1 billion in free cash flow by 2026, indicating a favorable valuation with a free-cash-flow multiple of 18.7 based on its current market cap of $18.7 billion [12].