J.P. Morgan says fears of an AI-driven software wipeout are overblown and highlights 19 stocks—from Microsoft to CrowdStrike—it believes are positioned to rebound. ...

Core Viewpoint - The market's expectations regarding the short-term disruption of the software industry by artificial intelligence (AI) are overly pessimistic, and software stocks are poised for a rebound as unrealistic disruption scenarios have already been priced in [1] Group 1: Market Analysis - The team led by Dubravko Lakos-Bujas at JPMorgan suggests that investors should increase their holdings in high-quality software stocks that are resilient to AI disruptions [1] - The extreme price movements in the software sector indicate that capital is likely to flow back into this segment in the short term [1] - The report states that the market has significantly reduced its positions, and the overly negative perception of AI's impact on the software industry, combined with solid industry fundamentals, suggests that the risk balance is increasingly leaning towards a rebound [1] Group 2: AI Impact Assessment - JPMorgan analysts believe that investors have overestimated the disruption caused by AI on software stocks [1] - The market is currently pricing in the worst-case scenarios for AI disruption, which are unlikely to materialize in the next three to six months [1] - Software companies that demonstrate resilience to AI disruptions are seen as having significant growth opportunities [1]

Core Insights - UiPath Inc. (PATH) shares have experienced a significant decline of 25% over the past month and 9% over the last three months, indicating a shift in investor sentiment [1][6] Group 1: Business Performance - Despite the stock decline, UiPath has shown strong execution in its core business, achieving a 16% year-over-year revenue growth and an 11% increase in annual recurring revenue in the last reported quarter [3] - The company reported a GAAP operating income of $13 million, marking its first GAAP-profitable third quarter, alongside a non-GAAP operating income of $88 million [3] - Gross margins remained robust, with GAAP gross margin at 83% and non-GAAP gross margin at 85%, highlighting the software-driven nature of the business [3] Group 2: Customer Adoption and Market Position - UiPath generated $59 million in net new annual recurring revenue (ARR) during the quarter, achieving a dollar-based net retention rate of 107%, indicating strong customer satisfaction and usage expansion [4][6] - The company's unified agentic automation platform is gaining traction as enterprises prefer integrated solutions, providing UiPath with a competitive advantage [4] Group 3: Strategic Partnerships - UiPath is enhancing its ecosystem through partnerships with major companies like Microsoft, OpenAI, Alphabet's Google, NVIDIA, and Snowflake, which extend its reach into critical workflows [8] - Collaborations with Microsoft and NVIDIA enable the deployment of enterprise-grade AI models, further solidifying UiPath's technological leadership [8] Group 4: Financial Position - As of the fiscal third quarter, UiPath held $1.4 billion in cash with no debt, providing financial flexibility for growth initiatives [9] - The company reported a current ratio of 2.65, exceeding the industry average, indicating strong liquidity to cover short-term liabilities [10] Group 5: Earnings Outlook - The Zacks Consensus Estimate indicates a near-term earnings decline of nearly 4% year-over-year for the fourth quarter of fiscal 2026, suggesting potential margin pressure [11] - Revenue growth is projected to slow to nearly 10%, raising concerns about demand normalization and the pace of large enterprise deal closures [11] Group 6: Investment Sentiment - The recent stock pullback presents a mixed near-term outlook, supporting a Hold stance as operational execution remains strong but earnings pressure and moderating growth momentum may limit upside potential [14]

AppLovin Corporation (NASDAQ:APP) is one of the stocks in focus on Jim Cramer’s game plan. Cramer highlighted the market’s change in sentiment toward the stock, as he commented: You know what the market doesn’t like? How about AppLovin, which is a former market darling from the year of magical investing? Not so magical now that Google’s decided to crowd into that space. A stock market graph. Photo by energepic.com AppLovin Corporation (NASDAQ:APP) provides a software platform that helps advertisers an ...

Market Overview - US stocks are trading near record highs, with the S&P 500 close to its all-time high of 4,796.56, just about 10 points below that level [6] - Despite the rally, investor sentiment appears cautious, with concerns about the tech sector dominating discussions [7][10] - The energy sector is noted as the best-performing group this year, followed by materials and consumer staples [9] Company Earnings - Coca-Cola's earnings report disappointed investors, with its outlook at the bottom end of expectations, projecting organic revenue growth of 4% to 5%, slightly below the anticipated 5% [27][29] - Spotify reported a significant increase in monthly active users, reaching 751 million, a rise of 11% year-over-year, attributed to successful marketing campaigns [3][43] - Harley-Davidson experienced a 4% drop in shipments, contrary to analyst expectations of a 22% increase, leading to a decline in stock value [45] Consumer Behavior - Recent retail sales data for December showed no growth, significantly worse than the expected 0.4% increase, indicating potential weakness in consumer spending during the holiday season [15][16] - The K-shaped economic recovery is highlighted, with high-income consumers continuing to spend while low-income consumers seek more affordable options [32][34] - Coca-Cola noted that while total spending is up, low-income consumers are increasingly looking for value, opting for smaller packages or shopping at discount stores [32][34] Investment Trends - Alphabet is making headlines by issuing a $1 billion bond with a 100-year maturity, marking a significant move in the tech sector [2][14] - The software sector is facing scrutiny, with concerns about the future earnings visibility of companies like ServiceNow and Salesforce, as AI developments create uncertainty [11][12] - Investors are advised to consider selective buying in software, focusing on companies with strong competitive advantages [51][52]

Group 1 - CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is identified as a potential undervalued stock in the cybersecurity sector, with a noted decline of 30% from its highs [1] - The company is recognized for its cloud-based cybersecurity solutions, providing protection for endpoints, cloud systems, identities, and data [3] - The trust continues to support CrowdStrike despite its stock decline, emphasizing its importance in the cybersecurity space and the potential for collaboration with AI technologies [1][3] Group 2 - There is a belief that certain AI stocks may offer greater upside potential compared to CrowdStrike, indicating a competitive landscape in the investment space [4] - The article suggests that while CrowdStrike is a strong player, other investment opportunities in AI may present less downside risk [4]

Company Overview - Okta, Inc. (NASDAQ:OKTA) specializes in identity management and security solutions, providing products that enable secure access, authentication, and governance across both cloud and on-premises systems [2] Market Performance - Despite having strong business fundamentals and good performance in recent quarters, Okta's stock has declined over 30% from its highs in May, even falling below its levels after the market downturn in April [2] Investment Potential - Jim Cramer identified Okta as a potential undervalued buy, noting that the stock is currently trading at 23 times this year's earnings, which may present a buying opportunity [1] - The company is expected to experience only 7% earnings growth this year, which is considered unusual for a company of its caliber [1] - CEO Todd McKinnon highlighted the significant opportunity for Okta in securing AI agents being developed within enterprises, indicating a potential growth area for the company [1]

ServiceNow, Inc. (NYSE:NOW) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer highlighted the company’s expected earnings growth during the episode, as he said: ServiceNow, which we had on the show last week, is also starting to look good, down over 50% from its high. They’re expected to grow earnings by 19% this year. And though you’d have to still pay a slight premium with the stock selling for nearly 24 times this year’s numbers, that’s down from nearly 70 times ...

Salesforce, Inc. (NYSE:CRM) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer noted that the stock is among those that look “enticing” and stated: Well, those are my top five that passed the strict screen we ran to identify undervalued software stocks. But if you’re willing to step a little outside these strict parameters, I’ve got five more that are starting to look enticing. Well, first, there is Salesforce, which we own for the Charitable Trust. Photo by jason ...

Group 1 - Intuit Inc. (NASDAQ:INTU) is identified as a potential undervalued stock, with a significant sell-off of over 45% from its high, currently trading at approximately 19 times this year's earnings estimates [1] - The company is recognized for its financial management, tax preparation, marketing, and personal finance solutions, including products like TurboTax and QuickBooks [3] - Despite the potential of Intuit as an investment, there are opinions suggesting that certain AI stocks may offer greater upside potential and carry less downside risk [3]