Solid software companies have been able to escape the negative gravity of the stock markets in recent months (especially in autumn 2018) and are still in an upward trend that has continued for several years. Big, well-known names such as Microsoft (YTD +30%), CyberArk Software (YTD +75%), Synopsys Inc (+YTD 51%) and Temenos (YTD +51%) provide impressive evidence of this fact.
Inter-industry M&A such as the purchase of CA Technologies (software manufacturer) by Broadcom (semiconductor manufacturer) for just under $19bn in autumn 2018, the Red Hat takeover by IBM for $34bn, the takeover of Tableau (DATA US) by SalesForce (CRM US) for $15bn announced a few days ago or the incorporation of Mediadata by Dassault Systems for over $5bn keep the industry in suspense and underline its dynamism.
Issues like cloud, software as a service (SaaS), artificial intelligence (AI) and AR/VR (Augmented Reality/Virtual Reality) and their rapid development are constantly bringing to light new companies that are leaders in their respective fields.
When productivity gains slow down, software can often be the most efficient way to accelerate them. These are secular trends that overlap normal business cycles. For this reason, spending on software (capex) will remain high in the future and revenue growth should accelerate.
As a consequence, software companies should be kept at the core of every depot. We have a possible product for it.