Summary of Great Agentic AI Software Stocks

In the evolving landscape of software, the article by Lucas Downey emphasizes that while some may claim the software trade is dead due to the rise of AI, there are still significant opportunities within the AI software sector. The focus is on three key stocks that are positioned to thrive in this new environment.

Key Concepts

The article introduces the concept of the "AI software stack," which includes:

• AI agents
• Business applications
• Data analytics
• Cloud computing, storage, and networking
• Data infrastructure

This stack is essential for the development of agentic AI, which refers to digital workers performing specific tasks, indicating a shift in how businesses operate.

Highlighted Stocks

1. Oracle (ORCL)

Oracle, with a market capitalization of $707 billion, is identified as a cloud infrastructure leader. The company is expected to see its revenues grow from $67.2 billion to nearly $130 billion by fiscal 2028. Despite experiencing outflows during a recent software downturn, recent inflows suggest a recovery, indicating that Oracle's shares may be undervalued.

2. ServiceNow (NOW)

ServiceNow, valued at $126 billion, is recognized for its role in digital workflows and AI assistance. Analysts predict a rise in annual per-share earnings from $4.15 this year to $6.20 by 2028. The stock has been under pressure but shows signs of being oversold, with institutional interest potentially returning.

3. Microsoft (MSFT)

Microsoft, with a staggering market cap of $3.3 trillion, is deeply integrated into the AI software stack. The company has strong earnings, with EPS estimates projected to rise significantly over the next few years. Despite recent sell-offs, Microsoft continues to attract institutional capital, reinforcing its status as a solid investment choice.

Conclusion

The article concludes that in the software industry, particularly in the context of AI, there will always be winners and losers. Companies that adapt and embrace AI technologies are likely to succeed in the long run. Investors are encouraged to monitor institutional money flows to identify promising investment opportunities.

Disclosure: The author owns shares in Microsoft but has no positions in Oracle or ServiceNow.