2026 is turning out to be an apocalyptic year for software stocks, as investors juggle the question of whether or not AI and vibe coding will be able to break the bulwark of enterprise software'sWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has ...

Group 1 - Microsoft Corporation (NASDAQ:MSFT) is considering the use of superconducting power lines in its data centers to enhance energy efficiency and support its expansion of server warehouses across the U.S. [1] - The development of large data centers has been hindered by the aging national power system and electricity supply limitations [1] - An executive from Microsoft's CO+I CTO Office stated that the technology would allow for scaling power density without increasing physical footprint and would reduce the size of power transmission infrastructure [2] Group 2 - Piper Sandler maintained an Overweight rating on Microsoft with a price target of $600, citing a favorable environment for hyperscalers and select vertical software companies [4] - The firm considers Microsoft to be a leading player in AI adoption, positioning it among their top investment picks [4] - Microsoft is recognized as a global technology company offering a diverse range of software, cloud services, devices, and business solutions [5]

Core Insights - 2026 is projected to be a challenging year for software stocks, with investors questioning the impact of AI and vibe coding on enterprise software [1] Group 1: Industry Trends - The software industry is facing significant scrutiny as investors assess the potential of AI and vibe coding to disrupt traditional enterprise software [1] - The combined experience of industry experts highlights the ongoing themes shaping the technology sector, particularly in relation to startups and established companies [1] Group 2: Analyst Background - Gary Alexander has extensive experience in both Wall Street and Silicon Valley, providing insights into the technology landscape [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, indicating a strong presence in the investment community [1]

Market Overview - Inflation has dropped to its lowest level in eight months, with core inflation at its lowest since March 2021, indicating a potential shift in market dynamics [1][3] - The current market sentiment suggests that bad news may not be beneficial for the market, as it could limit the Federal Reserve's ability to be more accommodative [2][3] Federal Reserve Insights - The Federal Reserve is less likely to cut rates with inflation decreasing and job numbers unexpectedly high, leading to a lower unemployment rate of 4.3% [4][5] - Citigroup's analysis suggests no rate cuts in the first half of the year but anticipates three cuts in the latter half, raising questions about the underlying analytics driving this forecast [5][7] Sector Analysis - The software sector has been oversold, and while AI poses a threat, it is not yet time to abandon software investments [8][13] - Companies like Intuit, which have strategic partnerships in AI, are seen as potential investment opportunities due to their revenue growth and current valuation being 50% off their all-time high [10][11][13] Energy and Infrastructure - Energy companies, particularly Duke Energy, are highlighted as strong long-term plays due to their capital expenditure plans to support data centers necessary for AI [15] Gold and Bitcoin Perspectives - Gold is viewed as having potential for significant price increases, with some analysis suggesting it could be valued around $20,000 per troy ounce based on inflation [18] - Bitcoin remains speculative, with expectations of further price declines in the near term, but it is recognized as a long-term investment due to its foundational role in blockchain technology [20][22] Market Expectations - The market is expected to experience volatility, with a projected overall positive performance for the year, but not at the levels seen in previous years, estimating a 5-10% increase [22][23]

Core Viewpoint - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [3]. Group 1 - The analyst expresses a beneficial long position in shares of major tech companies such as Google (GOOG), Meta (META), and Amazon (AMZN) through various financial instruments [2]. - The analysis aims to provide contrasting views on the analyst's portfolio, leveraging unique insights and knowledge from a decade of experience in investment banking [1]. Group 2 - The article clarifies that the analysis is for informational purposes only and should not be interpreted as professional investment advice [3]. - It notes that past performance of investments does not guarantee future results, and no specific recommendations are made regarding the suitability of investments for individual investors [4].

Core Viewpoint - Palantir Technologies Inc. is recognized as a leading high growth, high margin stock, with significant revenue growth and strong performance in the software industry [1][2]. Financial Performance - UBS reduced its price target for Palantir to $180 from $205 while maintaining a Neutral rating, citing a remarkable 70% total revenue growth and a 137% increase in U.S. commercial revenues exceeding $2 billion [1]. - Palantir's U.S. government operations, primarily from Department of Defense contracts, grew by 66%, showcasing the company's unique financial success in the software sector [2]. - Truist Securities reaffirmed a Buy rating for Palantir, highlighting that the company achieved sales growth for the tenth consecutive quarter, reaching an annual revenue scale of over $4 billion [2]. Company Overview - Palantir Technologies Inc. specializes in software solutions that assist organizations in integrating, managing, and securing large datasets for human-driven analysis, with its main platforms being Gotham and Foundry [3].

Core Viewpoint - AppLovin Corporation (NASDAQ:APP) is considered one of the best high growth high margin stocks to buy, with its risk-reward profile having improved significantly following a stock selloff due to concerns over Google's Project Genie announcement [1]. Group 1: Project Genie Impact - Deutsche Bank analysts believe Project Genie could streamline game development by acting as a "generative game engine," allowing individuals with basic coding skills to create games and potentially reducing development time for gaming companies [3]. - Despite market fears regarding Project Genie, Deutsche Bank asserts it is "far too early" to determine the extent of its disruptive potential, suggesting that it may enhance the game creation process and boost content generation, ultimately benefiting advertising businesses for both Unity and AppLovin [4]. Group 2: Company Overview - AppLovin Corporation operates as a software-based advertising and app monetization company, divided into two segments: Advertising and Apps. The company also develops and publishes free-to-play mobile games through its studios and partners [4].

Geopolitical Developments - The U.S. has deployed a second aircraft carrier to the Middle East amid ongoing negotiations with Iran, signaling a willingness for military action if a favorable deal is not reached [2][3] - Treasury Secretary Besson indicated that the U.S. dollar has been used to influence protests in Iran, which reflects the geopolitical dynamics affecting the currency [4] Market Analysis - The S&P 500 and Dow have both seen nine consecutive months of gains on a total return basis, indicating a strong bull market despite recent market fluctuations [8] - Oil prices have shown a sustainable rise, contrasting with previous periods of stability in Iran, suggesting increased market volatility [5][6] Investment Sentiment - Current market sentiment has shifted from greed to fear, with a notable increase in short interest in technology ETFs, indicating a cautious outlook among investors [10][11] - Valuations in the software sector are at their lowest since 2013, presenting potential investment opportunities despite the prevailing market pessimism [13] Trade and Tariff Implications - The overall tariff level in the U.S. stands at 14.2%, with expectations that it may decrease to closer to 10% by year-end, which could provide fiscal stimulus [16][17] - Anticipation of a significant bank deal with China may include a currency component, potentially exerting downward pressure on the U.S. dollar [17][18]

Core Insights - Check Point Software Technologies Ltd. (CHKP) reported Q4 2025 non-GAAP EPS of $3.40, exceeding estimates by 22.74% and up 25.9% year over year [1][9] - Q4 revenues were $744.9 million, slightly missing the consensus by 0.15% but above the midpoint of the guided range [2][9] Revenue Breakdown - Security subscription revenues reached $325.1 million, an 11.3% increase year over year, surpassing consensus by 0.75% [3] - Product and licenses revenues grew 0.7% year over year to $171.8 million, falling short of estimates by 4.33% [3] - Total revenues from products and security subscriptions were $496.9 million, up 7.4% year over year, but missed the segment sales consensus by 0.99% [3] Profitability Metrics - Non-GAAP gross profit increased 5.9% year over year to $660 million, with a gross margin of 88.6%, up 10 basis points from the previous year [4] - Non-GAAP operating expenses rose 12.9% to $358 million, leading to a contraction in operating margin to 40.6% [5] Key Financial Metrics - Calculated billings grew 8% year over year to $1.04 billion, indicating strong demand [6] - Remaining Performance Obligation (RPO) also increased 8% year over year to $2.73 billion, reflecting healthy backlog growth [6] Balance Sheet and Cash Flow - The company ended Q4 with cash and equivalents totaling $4.3 billion, a significant increase from $2.8 billion in the previous quarter [7] - Cash generated from operations in Q4 was $310 million, up from $241 million in the prior quarter [7] Guidance - For Q1 2026, revenues are projected between $655 million and $685 million, with non-GAAP EPS expected in the range of $2.35-$2.45 [10] - For the full year 2026, revenues are anticipated to be between $2.83 billion and $2.95 billion, with non-GAAP EPS expected to range from $10.05 to $10.85 [11]

Sony - Sony has launched the WF-1000XM6 flagship wireless noise-cancelling earbuds, claiming a 25% improvement in noise reduction compared to the previous model, along with enhancements in call performance, connectivity, and comfort [1] - Sony has introduced a new Sand Pink color variant for its WH-1000XM6 headphones in India, which were originally launched in September last year in Black, Platinum Silver, and Midnight Blue [10] - During the PlayStation State of Play event on February 12, Sony revealed updates and release dates for several upcoming games, including a remake of the God of War Greek trilogy and a new John Wick title [3][5] - The February lineup for the PlayStation Plus game catalogue includes popular titles such as Marvel's Spider-Man 2 and Disney Pixar Wall-E, with God of War Sons of Sparta now available for PS5 users [12] Google - Google has rolled out a new AI-driven feature in Google Docs that allows users to hear brief audio summaries of their documents, building on the Text-to-Speech tool introduced in August 2025 [2] - Google announced a significant upgrade to its reasoning mode, Gemini 3 Deep Think, designed to tackle complex scientific and engineering challenges, with the rollout beginning for Google AI Ultra subscribers [9] Nvidia - Nvidia has introduced a standalone GeForce Now app for devices running Amazon's Fire OS, allowing Fire TV Stick users to access the cloud gaming platform and stream games from their libraries [8] - Nvidia Corp. is expected to lease a data center being constructed with proceeds from a $3.8 billion junk-bond offering, intensifying borrowing activity linked to AI infrastructure [20] Apple - Apple has reiterated that there is no delay in launching the revamped Siri, with plans to release it in 2026, following a report suggesting a delay [7] - Apple is preparing to open its sixth store in India, marking its continued expansion in the region [16] Technology Sector - The technology sector is facing widespread layoffs, with over 30,000 workers affected globally, and 24,600 of these cuts occurring in the United States [15] - Microsoft AI CEO has warned that AI could replace a substantial portion of white-collar roles within the next 12 to 18 months [17] - NITI Aayog has called for a major restructuring of India's technology services sector around AI, indicating that the current labor-intensive approach may not remain competitive [18] AI Summit - The India-AI Impact Summit 2026 is scheduled for February 16 to 20 in New Delhi, aiming to gather various stakeholders to examine the practical implementation of AI [19]