BofA analysts favor major Microsoft, Salesforce stocks as top AI plays.

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Large-cap software development stocks such as Sales force A Bank of America analyst says (CRM) is outperforming as investors reevaluate the sector’s improvements with creative artificial intelligence. Salesforce stocks and software makers like Palantir Technologies (PLTR) is at 52-week highs heading into late April earnings reports.


gave iShares Expanded Tech Software ETF ( IGV ) — which includes many of the big enterprise software players — is set to grow just 6 percent in 2024 after a 59 percent gain last year.

Bank of America analyst Alkeesh Shah said in a statement, “Despite a bumpy 4Q, the software sector saw selling pressure as AI-driven expectations rose, but multiples were largely at pre-Covid levels. remain below , indicating that AI-driven upside may be ahead,” Bank of America analyst Alkeesh Shah said in a statement. Reports

The strength of the US economy, inflation, interest rates and corporate spending are key issues for software growth stocks. Also, a big debate remains: How soon will companies monetize “production” artificial intelligence?

Top AI Software Stocks

Shah is among analysts who expect revenue growth from generative AI for many software stocks in late 2024 or 2025.

“We expect the latest AI wave, generative AI, to drive the next phase of software investment, revenue growth and margin expansion,” said the BofA analyst. “Investors often overestimate the magnitude of technological disruption in the near term and underestimate it in the long term.”

Microsoft ( MSFT ) already stands out as AI-related revenue grows, he notes. Shah also favors Salesforce stock. MongoDB (MDB), Service Now (now), Git Labs (GTLB) and HubSpot (Hubbs).

Google Parents the alphabet ( GOOGL ) is eyeing a purchase of HubSpot, according to a recent report. But most Wall Street analysts doubt a deal will be reached.

Meanwhile, Salesforce stock is up 13% in 2024 after jumping nearly 98% in 2023. Palantir stock is up 30% this year after surging 167% in 2023.

The buzz of artificial intelligence

Salesforce stock and Palantir stock are trading near their 50-day moving averages, an important support level.

HubSpot and Microsoft stocks belong on the IBD 50 Roster of Growth Stocks.

Buzz around AI stocks has grown since the launch of OpenAI startup ChatGPT in November 2022. Microsoft is OpenAI’s largest investor.

OpenAI is a leader in generative AI technology, which uses large-scale datasets and computing power to generate high-quality content in general, including text, images, video and even programming code.

Industry-specific versions of generative AI are expected to use company data to train AI models. The challenge for many software companies is how to value the AI ​​tools integrated into their platforms.

Follow Reinhard Krause on Twitter. @reinhardtk_tech For updates on artificial intelligence, cybersecurity and cloud computing.

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