Cathie Wood Says Software Is the Next Big AI Opportunity -- 2 Super Stocks You'll Regret Not Buying if She's Right

AI Software Opportunity - The chip industry has created trillions of dollars in value from AI, but software presents an even greater opportunity [1] - Cathie Wood predicts software companies could generate $8 in revenue for every $1 spent on AI hardware [1] - Ark Investment Management has invested in AI software companies like OpenAI, Anthropic, and xAI, with Tesla being the largest holding due to its autonomous self-driving software [1] Palo Alto Networks - Palo Alto Networks has seen a tenfold increase in cyber attacks like phishing emails over the past year [3] - Over 90% of security operations centers rely on human-led processes, leaving 23% of incidents uninvestigated [3] - The company's AI-powered cybersecurity tools, such as Cortex XSIAM, automate threat detection and incident response [3] - XSIAM reduced incidents requiring human investigation by 75% for one oil and gas company and cut response times from three days to 16 minutes for another customer [4] - Palo Alto generated $2.0 billion in revenue in Q3 fiscal 2024, a 15% YoY increase, with a shift toward "platformization" [4] - Customers using all three platforms (cloud, network, and operations) have a lifetime value 40 times higher than those using just one [4] - The company expects $4.1 billion in annual recurring revenue by the end of fiscal 2024, a 39% YoY increase, and plans to triple that to $15 billion by fiscal 2030 [5] C3.ai - C3.ai, founded in 2009, offers over 40 ready-made AI applications for 19 industries, enabling faster and cheaper AI integration [6] - Applications like Smart Lending and Anti-Money Laundering are popular in non-tech industries such as energy, financial services, and manufacturing [6][7] - Dow Inc uses C3ai's Reliability application for predictive maintenance, reducing downtime in steam cracking equipment by 20% [7] - C3ai had 487 customer engagements in Q4 fiscal 2024, a 70% YoY increase, with revenue reaching a record $86.6 million, up 20% YoY [7] - The company forecasts a 23% YoY revenue increase for Q1 fiscal 2025, driven by its transition to consumption-based revenue [8] - C3ai lost $14 million on a non-GAAP basis in Q4 but has $750 million in cash and equivalents to sustain growth initiatives [8]