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SOFTWARE EARNINGS: NO 'TURNING POINT' IN SIGHT
After indiscriminate selling earlier this year over AI disruption concerns, software stocks have largely been spared the sharp selloffs that have swept across most sectors since the outbreak of the conflict in Iran.
But as reporting season approaches, Barclays sees the AI debate continuing to cloud sentiment, with Q1 numbers from European software and payments unlikely to shift the narrative. The sector has already suffered a steep fall, with the bank's coverage down over 26% in Q1, broadly in line with global software but well behind wider tech and the overall market.
That weakness, Barclays says, is not driven by deteriorating fundamentals, which remain "broadly solid", but by unease after recent AI model launches reignited fears of structural disruption.
Off-quarter results from U.S. peers have done little. Solid quarters from Salesforce CRM.N and Oracle ORCL.N failed to provide lasting catalysts.
"We do not expect results to resolve the ongoing debates across the sector but see the potential for them to evolve and increasingly drive relative performance," analysts led by Sven Merkt say.
Even so, they see selective opportunities in Wise WISEa.L, Temenos TEMN.S, where they expect strong quarters ahead of consensus, and Capgemini CAPP.PA, given conservative guidance and positive read across from Accenture.
(Danilo Masoni)
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EARLIER ON LIVE MARKETS:
DE-DE-ESCALATION CLICK HERE
EUROPE BEFORE THE BELL: HEADING FOR AN UGLY OPEN CLICK HERE
PRIME-TIME DISAPPOINTMENT CLICK HERE
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