Morningstar Says Software Stocks Haven't Been This Undervalued In 3 Years. These 3 Look Like Good Deals.
Morningstar analyst Dan Romanoff says software firms are the most undervalued they've been in three years, with Microsoft, Salesforce, and Alphabet being good deals. These companies are well-positioned to benefit from artificial intelligence (AI) despite investor concerns about its impact.
Software stocks are currently undervalued, according to Morningstar analyst Dan Romanoff, due to investor concerns about the impact of artificial intelligence (AI). Microsoft, Salesforce, and Alphabet are considered good deals as they are well-positioned to benefit from AI. Microsoft has invested heavily in AI, owning 27% of OpenAI and implementing ChatGPT models into its Copilot service. The company's trailing P/E ratio is 26.5, considered a good value compared to the tech sector's average of 43. Salesforce has also made progress with its AI strategy, with its Agentforce AI service generating $800 million in annual recurring revenue. Salesforce's stock has a trailing P/E ratio of 24, making it a bargain. Both companies have strong positions in the enterprise software market, making them less likely to be disrupted by new AI models.
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