Software Slump & Silver Linings

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Right. So, the market. It’s doing that thing again. You know, the one where everyone suddenly decides that everything is awful, and AI is less a miracle cure and more…well, a bit of a double-edged sword. Honestly, it’s exhausting. One minute it’s going to solve all our problems, the next it’s going to steal our jobs and ruin the economy. It’s enough to make you want to just…buy a small farm and raise alpacas. But then, alpacas probably require complex software to manage their shearing schedules. See? It never ends.

Software stocks, in particular, have taken a bit of a beating. Apparently, analysts are starting to worry that all this fancy AI might actually replace the need for, you know, actual software. The sheer audacity. It’s like saying the internet will replace…books. Unthinkable. And naturally, this means everyone’s recalibrating their expectations. Lowering earnings multiples. Being generally gloomy. It’s a vicious cycle. I’ve started leaving extra space in my budget for emergency chocolate purchases.

But – and there’s always a ‘but’, isn’t there? – I’ve been looking at a couple of companies that seem…resilient. Not immune to the gloom, obviously, but…holding their own. And analysts, bless their optimistic little hearts, are suggesting there’s still some serious upside potential. Which, frankly, is a relief. Because staring into the abyss of a portfolio meltdown is not conducive to a good night’s sleep.

Here’s my take on Intuit and Salesforce. And, just to be clear, this isn’t financial advice. I’m just a market watcher with a slightly unhealthy obsession with spreadsheets and a tendency to overthink things.

Intuit: The Accountant’s Friend (and Possibly Mine)

Intuit. TurboTax, QuickBooks…they’re everywhere, aren’t they? It’s slightly terrifying how much of our financial lives we entrust to them. They also own Credit Karma and Mailchimp, which feels like a strangely comprehensive overview of my existence: taxes, credit, and endless promotional emails. But, you know, they’re doing something right. They’re expecting revenue growth of around 14-15% this year, which, in this climate, feels almost…optimistic.

They’re building this ‘online ecosystem’ thing, which sounds terrifyingly complex, but basically means they’re trying to get everyone hooked on all their services. QuickBooks users signing up for TurboTax, and vice versa. It’s the digital equivalent of a loyalty card, but much more sinister. Still, it seems to be working. Apparently, 80% of their business comes from this ecosystem. Which is…a lot. And switching costs are high, because small business owners are usually too busy actually running their businesses to bother shopping around for a better deal.

Retention rates are a bit lower than you’d expect for a SaaS company, but that’s apparently because so many small businesses fail. Which, let’s face it, is a sobering thought. Still, Intuit points out that businesses using QuickBooks actually have a higher success rate. Which is…encouraging. Units of Cryptocurrency Lost: 0. Hours Spent Worrying About Small Business Failure Rates: 2.

The stock is currently trading at around $400, but the median price target is $800. Which, if you do the math, is a 100% upside. At 17 times forward earnings, it looks…well, almost too good to be true. Which, naturally, makes me suspicious. But I’m trying to be optimistic. Trying, very hard.

Salesforce: The Cloud’s Keeper

Salesforce. They offer all sorts of ‘clouds’ – sales clouds, service clouds, marketing clouds…it’s a veritable meteorological phenomenon. It’s all very impressive, and also slightly overwhelming. They’ve managed to create this suite of services that all work together, which apparently keeps customers coming back for more. High net revenue retention rates, consistent earnings growth…it’s all very solid. And boring. In a good way.

They’ve also been tinkering with AI, introducing something called Agentforce. It sounds complicated, but basically it uses their Data Cloud to automate tasks. Apparently, it’s been growing at a ridiculous rate – 330% year over year. Which, admittedly, is impressive. It’s still a small part of their overall business, but it’s a sign that they’re trying to stay ahead of the curve. Number of times I’ve Googled “What is a Data Cloud?”: 3.

Management is talking about accelerating revenue growth and expanding margins. They want to be a ‘Rule of 50’ company – which means operating margin plus revenue growth exceeding 50%. Which sounds ambitious. But if they pull it off, it could be worth a lot more than it is today. The stock is trading at around $190, but the median price target is $325. That’s a 72% upside. At 14.5 times forward earnings, it seems…reasonable. Even if management is being slightly optimistic. Which, let’s be honest, they probably are.

So, there you have it. My slightly neurotic take on the software slump. I’m not saying these stocks are guaranteed winners. But in a world of uncertainty, a little bit of resilience can go a long way. Now, if you’ll excuse me, I need to go buy some chocolate.

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2026-02-21 01:13