Dan Ives Says Software Stocks Have Clear Buy Signal

Dan Ives states that software stocks have received their clearest buy signal in months, highlighted by Oracle's latest earnings. Ives, a partner at Yorkville Ives, emphasized the need for institutional investors to return to software, citing Oracle, Adobe, Palantir, and Snowflake as key players. He believes Wall Street has undervalued Oracle's backlog, assuming a 50% to 60% chance that it will not convert to revenue, which relies on Oracle's ability to expand data center capacity for cloud and AI demand. Ives noted that one strong quarter is insufficient for Oracle to regain full market confidence, as investors remain skeptical after previous earnings reports. In contrast, Ives expressed more confidence in semiconductors, pointing to a 13-to-1 demand-to-supply ratio in Asian chip markets, making Nvidia a safer investment compared to AMD or Intel. The software sector has recently rebounded after a period of underperformance due to AI-related concerns, with improvements now evident across the industry. However, Ives refrained from issuing a definitive buy signal, indicating that the sector is still proving itself and investors should be cautious.

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