Hey, listen – have you been keeping up with the comings and goings of AI lately?
Because the commoditization of AI is coming, and that’s a bullish sign for software.
Think about it – China’s “DeepSeek” AI platform just proved that China is far along in AI innovation, much further than U.S investors initially thought.
With all these global firms battling for AI dominance, it’s only a matter of time before AI becomes commoditized.
And when that happens, software companies are going to cash in big time.
Right now, software firms have to shell out massive amounts of capital just to integrate AI into their products.
But as AI becomes a commodity, those costs will drop, and the profit margins? They’re going to soar.
Companies will be able to optimize development costs and boost efficiency like never before.
That’s why software investors should be paying close attention.
Software is Eating the World
You’ve heard of Marc Andreessen, right? The guy who co-founded Netscape and is one of Silicon Valley’s biggest names?
Well, back in 2011, he wrote that “software is eating the world.” And man, was he right.
Think about it – software isn’t just for tech companies anymore.
It’s infiltrated every industry: healthcare, finance, transportation, entertainment – you name it.
Companies that once relied on traditional business models have either adapted to software or have been left in the dust.
And if you were an investor who saw this coming? You made a killing.
Just look at the iShares Software ETF (IGV). Over the past 15 years, it’s up a mind-boggling 1,000%, double what the S&P 500 Index has returned.
However, year-to-date, software is lagging the general market. But does that mean software is losing its edge?
Is Software Still King?
Here’s the thing – Andreessen’s prediction wasn’t just about a temporary boom.
Software stocks are still one of the best places to invest, and there are five big reasons why they will continue to keep thriving over the next 12-24 months.
Continued . . .
------------------------------------------------------------------------------------------------------
Only $1 for AI Stock Access
Artificial Intelligence (AI) is just starting to skyrocket from $40 billion to $1.3 TRILLION in revenue in 10 years, igniting many tech stocks along the way. Today, you can be among the first to Zacks’ newest stock that will be revealed Monday morning. It could have much more upside than even NVIDIA through the end of 2025.
Special opportunity ends at midnight Sunday, February 9.
Start Access Now for $1 >>
------------------------------------------------------------------------------------------------------
1) Software Demand is Rock Solid
Did you know software spending has been growing at around 9% per year for a decade? And according to Gartner, it’s expected to keep growing at 8-11% - way ahead of economic growth (2-3%) and tech spending (3-14%). That’s huge. Investors who focus on long-term earnings growth know that software is still one of the best bets out there.
2) Software Margins are Insanely High
If you’re running a software company, you’re making some serious cash compared to other industries. Software as a Service (SaaS) companies, in particular, are money machines. They use a cloud-based, subscription model that keeps revenue consistent while keeping costs low. Just look at Salesforce – their gross margin is a ridiculous 76% compared to the S&P 500’s 49.91%. That’s the kind of business you want to be in.
3) Software Drives Automation & Cost Cutting
Have you noticed how companies are automating everything lately? Rising labor costs are pushing businesses to replace human workers with software and AI-driven automation. Take Starbucks, for example. Their stock soared for years, but until recently, it stagnated. Why? Because wages, rent, and food costs ate into their profits. So, what did they do? They hired Brian Niccol, the former Chipotle CEO, who was already working on automation before he left CMG. Now he’s likely to do the same at Starbucks.
And it’s not just Starbucks. Walk into a McDonald’s or a Whole Foods – self-checkout kiosks and automated ordering systems are popping up everywhere. This isn’t just a food industry trend – it’s happening in every sector. Companies are realizing that automation, powered by software and AI, is the only way to stay profitable in an era of rising costs.
4) Interest Rates Are Coming Down
One of the biggest reasons software stocks struggled over the past few years is the Federal Reserve’s high interest rates. Lofty interest rates slow down economic activity, which means companies and consumers spend less. But guess what? At the time of this writing, investors are betting that there will be multiple rate cuts coming in mid-to-late 2025. And when that happens, software companies are going to benefit big time. Businesses will start spending more on software to boost efficiency, and consumers will have more money to invest in tech products. Lower rates also make tech stocks more attractive, driving up valuations.
5) Software Scales like Crazy
Here’s why software is so powerful – once you create a great product, you don’t have to keep reinvesting in manufacturing or distribution. All you need are software updates, and you can scale infinitely. That’s why so many software companies rake in high profits without massive expenses.
The Bottom Line
So, is software still king? Absolutely. The commoditization of AI is only going to make software companies more profitable. Demand is steady, margins are high, scaling is effortless, automation is booming, and rate cuts are on the horizon. If you’re looking for a solid investment over the next couple of years, software -- is still one of the best places to be.
With that in mind, I invite you to look inside the portfolio I'm managing, Zacks Technology Innovators.
This portfolio service highlights the most promising high-tech stocks, from software to AI and cutting edge breakthroughs like quantum computing.
We don't nail every pick but have recently closed winners like +121.0%, +147.9% and +211.26%.¹
And on Monday, I'm going to add a brand-new AI-powered stock to the portfolio that has exceptional upside.
You can be among the first to see this fresh pick. Plus, you'll also have the chance to immediately access all of the other live stocks inside.
Time-Sensitive Bonus: When you check out our Technology Innovators portfolio today, you're invited to download our just-released Special Report, Beyond AI: The Quantum Leap in Computing Power.
We reveal 7 carefully selected stocks poised to dominate the quantum computing landscape. These aren't just speculative plays - they're established companies making real moves in quantum technology.
One of these stocks could be "the next big thing" and surpass NVIDIA for quantum computing supremacy. Just an inch away from the number one position in the industry, the company's CEO is surrounded by the most competent engineering talent in the world. Their strategic approach makes them one to watch closely.
Don't wait. The total cost to see all Zacks tech stocks (and other recommendations) for 30 days is an astonishing $1. That's it. There's no further obligation. Deadline for this unique opportunity is midnight Sunday, February 9.
Gain Access Now for Just $1 >>
All the Best,
Andrew Rocco
Andrew is Zacks' technology stock strategist. His passion is making money on stocks along with education, where he aims to provide valuable insights from both a fundamental and technical perspective in his Technology Innovators portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.
Image: Bigstock
AI is Getting Cheap - And That's a Jackpot for Software Investors
Hey, listen – have you been keeping up with the comings and goings of AI lately?
Because the commoditization of AI is coming, and that’s a bullish sign for software.
Think about it – China’s “DeepSeek” AI platform just proved that China is far along in AI innovation, much further than U.S investors initially thought.
With all these global firms battling for AI dominance, it’s only a matter of time before AI becomes commoditized.
And when that happens, software companies are going to cash in big time.
Right now, software firms have to shell out massive amounts of capital just to integrate AI into their products.
But as AI becomes a commodity, those costs will drop, and the profit margins? They’re going to soar.
Companies will be able to optimize development costs and boost efficiency like never before.
That’s why software investors should be paying close attention.
Software is Eating the World
You’ve heard of Marc Andreessen, right? The guy who co-founded Netscape and is one of Silicon Valley’s biggest names?
Well, back in 2011, he wrote that “software is eating the world.” And man, was he right.
Think about it – software isn’t just for tech companies anymore.
It’s infiltrated every industry: healthcare, finance, transportation, entertainment – you name it.
Companies that once relied on traditional business models have either adapted to software or have been left in the dust.
And if you were an investor who saw this coming? You made a killing.
Just look at the iShares Software ETF (IGV). Over the past 15 years, it’s up a mind-boggling 1,000%, double what the S&P 500 Index has returned.
However, year-to-date, software is lagging the general market. But does that mean software is losing its edge?
Is Software Still King?
Here’s the thing – Andreessen’s prediction wasn’t just about a temporary boom.
Software stocks are still one of the best places to invest, and there are five big reasons why they will continue to keep thriving over the next 12-24 months.
Continued . . .
------------------------------------------------------------------------------------------------------
Only $1 for AI Stock Access
Artificial Intelligence (AI) is just starting to skyrocket from $40 billion to $1.3 TRILLION in revenue in 10 years, igniting many tech stocks along the way. Today, you can be among the first to Zacks’ newest stock that will be revealed Monday morning. It could have much more upside than even NVIDIA through the end of 2025.
Special opportunity ends at midnight Sunday, February 9.
Start Access Now for $1 >>
------------------------------------------------------------------------------------------------------
1) Software Demand is Rock Solid
Did you know software spending has been growing at around 9% per year for a decade? And according to Gartner, it’s expected to keep growing at 8-11% - way ahead of economic growth (2-3%) and tech spending (3-14%). That’s huge. Investors who focus on long-term earnings growth know that software is still one of the best bets out there.
2) Software Margins are Insanely High
If you’re running a software company, you’re making some serious cash compared to other industries. Software as a Service (SaaS) companies, in particular, are money machines. They use a cloud-based, subscription model that keeps revenue consistent while keeping costs low. Just look at Salesforce – their gross margin is a ridiculous 76% compared to the S&P 500’s 49.91%. That’s the kind of business you want to be in.
3) Software Drives Automation & Cost Cutting
Have you noticed how companies are automating everything lately? Rising labor costs are pushing businesses to replace human workers with software and AI-driven automation. Take Starbucks, for example. Their stock soared for years, but until recently, it stagnated. Why? Because wages, rent, and food costs ate into their profits. So, what did they do? They hired Brian Niccol, the former Chipotle CEO, who was already working on automation before he left CMG. Now he’s likely to do the same at Starbucks.
And it’s not just Starbucks. Walk into a McDonald’s or a Whole Foods – self-checkout kiosks and automated ordering systems are popping up everywhere. This isn’t just a food industry trend – it’s happening in every sector. Companies are realizing that automation, powered by software and AI, is the only way to stay profitable in an era of rising costs.
4) Interest Rates Are Coming Down
One of the biggest reasons software stocks struggled over the past few years is the Federal Reserve’s high interest rates. Lofty interest rates slow down economic activity, which means companies and consumers spend less. But guess what? At the time of this writing, investors are betting that there will be multiple rate cuts coming in mid-to-late 2025. And when that happens, software companies are going to benefit big time. Businesses will start spending more on software to boost efficiency, and consumers will have more money to invest in tech products. Lower rates also make tech stocks more attractive, driving up valuations.
5) Software Scales like Crazy
Here’s why software is so powerful – once you create a great product, you don’t have to keep reinvesting in manufacturing or distribution. All you need are software updates, and you can scale infinitely. That’s why so many software companies rake in high profits without massive expenses.
The Bottom Line
So, is software still king? Absolutely. The commoditization of AI is only going to make software companies more profitable. Demand is steady, margins are high, scaling is effortless, automation is booming, and rate cuts are on the horizon. If you’re looking for a solid investment over the next couple of years, software -- is still one of the best places to be.
With that in mind, I invite you to look inside the portfolio I'm managing, Zacks Technology Innovators.
This portfolio service highlights the most promising high-tech stocks, from software to AI and cutting edge breakthroughs like quantum computing.
We don't nail every pick but have recently closed winners like +121.0%, +147.9% and +211.26%.¹
And on Monday, I'm going to add a brand-new AI-powered stock to the portfolio that has exceptional upside.
You can be among the first to see this fresh pick. Plus, you'll also have the chance to immediately access all of the other live stocks inside.
Time-Sensitive Bonus: When you check out our Technology Innovators portfolio today, you're invited to download our just-released Special Report, Beyond AI: The Quantum Leap in Computing Power.
We reveal 7 carefully selected stocks poised to dominate the quantum computing landscape. These aren't just speculative plays - they're established companies making real moves in quantum technology.
One of these stocks could be "the next big thing" and surpass NVIDIA for quantum computing supremacy. Just an inch away from the number one position in the industry, the company's CEO is surrounded by the most competent engineering talent in the world. Their strategic approach makes them one to watch closely.
Don't wait. The total cost to see all Zacks tech stocks (and other recommendations) for 30 days is an astonishing $1. That's it. There's no further obligation. Deadline for this unique opportunity is midnight Sunday, February 9.
Gain Access Now for Just $1 >>
All the Best,
Andrew Rocco
Andrew is Zacks' technology stock strategist. His passion is making money on stocks along with education, where he aims to provide valuable insights from both a fundamental and technical perspective in his Technology Innovators portfolio.
¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position. Access grants you a comprehensive list of all open and closed trades.