The firm said to investors in a research note titled ‘Software Will Eat AI’ that enterprise software companies "will not be threatened by AI."
- HSBC also said that the historic valuations for software companies come at a time when the sector is poised to expand massively, according to TheFly.
- HSBC noted that enterprise software companies have been "doing the heavy lifting” with regard to AI agents.
- HSBC has a ‘Buy’ rating on multiple software companies, including Oracle (ORCL), Salesforce (CRM), CrowdStrike (CRWD), ServiceNow (NOW), and Palantir (PLTR).
HSBC on Tuesday expressed its bullish stance on enterprise software, saying valuations are at "historic lows” for companies in the sector even as mounting fears over new artificial intelligence (AI) tools have caused selloffs in recent weeks.
The firm said to investors in a research note titled ‘Software Will Eat AI’ that enterprise software companies "will not be threatened by AI." Instead, HSBC predicts that AI will be embedded within software platforms, as seen on TheFly.
HSBC also said that the historic valuations for software companies comes at a time when the sector is poised to expand massively.
Top Picks
In the note, HSBC noted that enterprise software companies have been "doing the heavy lifting” with regard to designing, vibe-coding, and beta testing of embedded agents, adding that software vendors are best suited for developing software with AI.
HSBC has a ‘Buy’ rating on multiple software companies, including Oracle (ORCL), Salesforce (CRM), CrowdStrike (CRWD), ServiceNow (NOW), and Palantir (PLTR).
Some of the other names that are on the firm’s ‘Buy’ list include Autodesk (ADSK), Akamai (AKAM), Alphabet (GOOG), HP Inc. (HPQ), Intuit (INTU), Microsoft (MSFT), TE Connectivity (TEL), and Zoom Communications (ZM).
Market Selloff
HSBC’s note comes amid a broader selloff in technology stocks following multiple AI tool releases from Anthropic in recent weeks.
The builder of AI assistant Claude, Anthropic has launched an open-source tool to help AI programs complete tasks independently, a new security feature to scan code for vulnerabilities, and its Common Business-Oriented Language (COBOL) capabilities, among others.
At the time of writing, some of the losses have been pared. The Nasdaq-100 (NDX), which tracks technology companies, gained 1.09%. Meanwhile, the First Trust NASDAQ Cybersecurity ETF (CIBR) was up 0.85%.
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