From panic to opportunity: how software company reports changed the narrative on AI

Four software companies from different fields published their financial reports last week: Salesforce, CrowdStrike, Okta, and Elastic. All four presented excellent reports but, more importantly, proved that AI is less of a threat to the software sector and more of a potential for unprecedented growth.

The acronym AI undoubtedly sends shivers through all software companies. Warnings about the impact of artificial intelligence on businesses have long ceased to be a theory. Chatbot models, led by Claude from Anthropic, are putting significant pressure on the sector. This pressure was also felt this year on the stock market: the IGV ETF, which tracks the software sector in the USA, reached a decline of almost 30% in mid-April. However, a gradual recovery trend began from that point, peaking last week with the companies' excellent reports, proving that they are not only surviving the revolution but also leading it.

From implementing Claude to record demand for cyber security

Let's start with the largest one — Salesforce. The company, which holds a cloud platform for customer relationship management, kicked off the celebration after publishing excellent reports on Wednesday, but that was not the main trigger for market optimism. What ignited investors was the announcement of a collaboration with Anthropic and the integration of its popular model, Claude, into the company's various platforms. The stock rose the next day by about 22% — the second-largest daily increase ever.

Besides Salesforce, CrowdStrike, which specializes in cyber and cloud security, and Okta, a software company for digital identity security, also reported on Wednesday. Both companies beat forecasts by a wide margin. The emphasis was on solutions for securing AI applications in the case of CrowdStrike, and on identity security solutions for AI agents in the case of Okta.

On Friday, Elastic reported. It also delivered a strong performance, but the most important line was the fact that the rate of customers using the company's AI tools almost doubled.

Not all software stocks are equal

When looking at the IGV ETF, the fund itself is almost at its peak. One can find stocks in it that have already reached a peak, such as Palo Alto and CrowdStrike; stocks close to a peak, such as Microsoft and Palantir; but also quite a few stocks that are significantly far from the peak. Among others, one can find Salesforce, Oracle, Adobe, and AppLovin there.