ServiceNow, Salesforce And Cadence Design: How Retail’s Positioned On These Beaten-Down S&P 500 Application Software Stocks
Earnings and macro worries have been common catalysts that drove down these stocks this year.
FollowApplication software stocks lagged the rest of the tech pack in 2024, but analysts were optimistic about the industry at the start of the year. They based their upbeat view on expectations of a favorable macroeconomic backdrop and an easier interest rate environment, underpinned by a relatively attractive valuation.
The new regime under President Donald Trump dashed their hopes by opting to walk the talk on the tariff proposals and confounding the economic outlook.
The top losers among the S&P 500 application software for the year-to-date (YTD) period are as follows:
ServiceNow, Inc. (NOW)
- Year-to-date Performance: (-21.71%)
- Retail Sentiment: Neutral
- Upside/Downside Potential (based on Finchat-compiled consensus): +37%
Santa Clara, California-based ServiceNow provides end-to-end intelligent workflow, automation platform solutions. The ServiceNow stock, which ended 2024 firmly above the $1,000 psychological level, came under selling pressure since the company reported a small beat for the fourth quarter in late January.
The stock topped out at a little shy of $1,200 on Jan. 28 on an intraday basis and began to pull back amid the broader market weakness.
ServiceNow recently announced an agreement to buy Mountain View, California-based agentic artificial intelligence (AI) assistant provider Moveworks for $2.85 billion in cash.
A retailer watcher said with the stock having bounced off a low near the $785 level, remains on track to test the $870 resistance.
Salesforce, Inc. (CRM)
- Year-to-date Performance: (-16.63%)
- Retail Sentiment: Neutral
- Upside/Downside Potential: +35.17%
Salesforce stock hit an all-time high of $369 on Dec. 4, following a stellar quarterly performance. Although the stock pulled back amid some profit-taking, it took the next leg down, dragged by the San Francisco, California-based company's fourth-quarter print released in late February.
While the fourth-quarter bottom line beat the consensus, the revenue was shy of estimates and key operational metrics also witnessed a slowdown. More importantly, the company issued lackluster guidance.
A bearish watcher balked at the stock’s valuation amid the competitive threat and said they would wait until it hits $180.
Another user, however, was excited about the stock breakout this week.
Cadence Design Systems, Inc. (CDNS)
- Year-to-date Performance: (-15.50%)
- Retail Sentiment: Extremely bullish
- Upside/Downside Potential: +25.65%
Cadence Design is a San Jose, California-based provider of functional verification services such as the Jaspar platform, Xcelium parallel logic simulation platform, Palladium enterprise emulation platform and Protium platform for chip verification.
After an uptrend in 2023, Cadence Design stock was in a broad consolidation phase for much of 2024.
The stock came under selling pressure following its fourth results and the broader market weakness.
A bullish watcher said he expects a parabolic move in the stock over the next few years, with the gains coming in at zero risk.
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