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Following Snowflake (SNOW) and Salesforce (CRM) most recent earnings prints that sent the companies' respective stocks in opposite directions, Wolfe Research managing director and head of software research Alex Zukin sits down with Julie Hyman and Josh Lipton on Market Domination Overtime to discuss how to play the software space amid the ongoing artificial intelligence (AI) boom.
"We're in a world where you have to try things and it's hard to price and effectively promise certain or make commitments on certain amounts of revenue," Zukin says about evaluating AI valuation. "This technology is moving extraordinarily quickly, and I think this year is the year that a lot of these companies start to actually show value," he adds.
"I would argue this year is the year that you start to see companies really put this stuff into production and unlock some value," the analyst says, noting that "it's prudent [for companies] to be a little bit careful at this point in time" as to not overpromise on artificial intelligence.
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For investors looking at the software space as an AI play, Zukin highlights the importance of growth rates and capacity to grow, naming Snowflake as a stock that fits this description.
The analyst tells Yahoo Finance that due to the seasonality in the enterprise software space, the first quarter is typically "tough" with acceleration to come in the second half of the year.
To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime here.
This post was written by Naomi Buchanan.