4 Beaten-Down Software Stocks to Buy Now?

Key takeaways

Software stocks have lagged behind hardware stocks over the past five years, indicating a potential opportunity for value investing in the software sector.
Remitly shows significant growth potential, but faces risks related to political factors and competition in the remittance market.
Adobe retains a strong position in creative software, with sticky enterprise customers, despite emerging competition from AI tools.
Monday.com has successfully expanded its customer base and revenue by targeting larger clients, showing resilient growth amid competition.
Airbnb has established a strong foothold in the alternative stay market and has opportunities for growth internationally, though challenges remain.
ServiceNow is making strategic acquisitions to bolster its cybersecurity offerings, maintaining high customer retention rates, which supports long-term growth.

Summary

The Divergence Between Software and Hardware Stocks

In this episode, the hosts discuss how software stocks have significantly underperformed relative to hardware stocks, particularly highlighting Nvidia's incredible performance. The conversation emphasizes the ongoing hardware-centric market, exploring how this has affected software investments and stock performance over the last five years.

Ryan’s Value Picks: A Closer Look at Remitly and Wise

Ryan Henderson shares insights on Remitly and Wise (formerly TransferWise), comparing their business models in the remittance space. He highlights Remitly's significant customer growth and mentions potential political factors affecting their growth trajectory. The analysis demonstrates the operational differences between the two companies, with a focus on audience targeting and pricing strategies.

The Future of Adobe in the Era of AI

The discussion delves into Adobe’s market position, likening it to the Western Union of creative software due to its established brand and customer base. Despite concerns over competition from AI tools like Canva, Ryan expresses confidence in Adobe's ability to retain enterprise customers, highlighting its essential role in creative industries and potential for steady revenue growth.

Exploring Monday.com’s Expansion and Competition

The podcast evaluates Monday.com, focusing on its successful upmarket strategy and customer growth. Ryan argues that while the competitive landscape for task management software is crowded, Monday.com has positioned itself advantageously with user-friendly features and strong customer retention, despite broader fears about AI substituting traditional SaaS tools.

Airbnb’s Business Model and Market Position

A deep dive into Airbnb reveals its monopoly over North American alternate stays and the long-term growth potential in international markets. Ryan discusses the importance of maintaining customer satisfaction and the balance between growth and quality, offering a nuanced perspective on Airbnb's evolving business model.

ServiceNow’s Strategic Moves in Cybersecurity

The conversation transitions to ServiceNow and its recent acquisitions in the identity security space. The hosts examine its impressive customer retention rates and potential for future growth as it integrates cybersecurity into its offerings, emphasizing the significance of these acquisitions in attracting new business amidst a challenging SaaS environment.

Show notes

Software stocks have been left in the dust while hardware and semiconductor stocks (like Nvidia) have sucked the air out of the room. But after a brutal 5-year underperformance compared to hardware, is there finally value in the software sector? In this episode, we are joined by Ryan Henderson of the Chit Chat Stocks Podcast and Fiscal.ai to break down the hardware decade and discuss where he is finding value right now. We cover the threat of AI "vibe coding" replacing SaaS, why Adobe might be the Western Union of creative software, and deep dives into Remitly, Wise, Monday.com, and Airbnb. Find Ryan and The Chit Chat Stocks Podcast here: https://open.spotify.com/show/4SBtOWGEOmD9pmltgIXO8r?si=2d1f06dc987f41aa Supercharge your analysis with AI! Get 15% of your membership with our special link here: https://fiscal.ai/csi/ Join us on Discord with Semiconductor Insider, sign up on our website: www.chipstockinvestor.com/membership Sign Up For Our Newsletter: https://mailchi.mp/b1228c12f284/sign-up-landing-page-short-form Chapters:[00:00] Intro: The Great Software vs. Hardware Divergence[00:58] The Charts: SMH vs. IGV (Software ETF) Performance[06:21] Ryan’s Value Pick #1: Remitly (RELY) vs. Western Union[10:59] Remitly vs. Wise (TransferWise): Key Differences[14:19] Is Adobe (ADBE) a Value Trap or Future Compounder?[18:49] Pick #3: Monday.com (MNDY) & Moving Upmarket[19:58] The "Vibe Coding" Debate: Will AI Kill SaaS Companies?[24:59] Pick #4: Airbnb (ABNB) – A Monopoly on Alternative Stays?[29:45] ServiceNow (NOW): Acquisitions, Identity Security, & 98% Renewal Rates[32:59] The Real AI Threat: Disruption of Data Aggregation & Financial Data If you found this video useful, please make sure to like and subscribe! ********************************************************* Affiliate links that are sprinkled in throughout this video. If something catches your eye and you decide to buy it, we might earn a little coffee money. Thanks for helping us (Kasey) fuel our caffeine addiction! Content in this video is for general information or entertainment only and is not specific or individual investment advice. Forecasts and information presented may not develop as predicted and there is no guarantee any strategies presented will be successful. All investing involves risk, and you could lose some or all of your principal. #SoftwareStocks #StockMarket #Investing #Adobe #Airbnb #SaaS #AI #Semiconductors #remitly #monday.com Nick and Kasey own shares of Monday.com