Apps & Software

Goldman Sachs Adds 3 Red-Hot Software Stocks to Conviction List

Some analysts maintain that Microsoft is discounting Azure for large enterprises, such that Azure may be cheaper than AWS for larger users. The cloud was big in 2020 earnings reports, and it will remain a growing part of the software giant’s earnings profile.

It should be noted the company had a massive hack over the weekend that could prove to be a near-term negative for the company.

Goldman Sachs noted this about the software behemoth:

With a strong presence across all layers of the cloud stack, including applications, platforms, and infrastructure, Microsoft is well positioned to capitalize on a number of long-term secular trends, including public cloud and SaaS adoption, digital transformation, Artificial Intelligence/Machine learning, Business intelligence/analytics, and Development Ops (amongst others). We see a pathway for sustained double-digit topline growth alongside continued margin expansion, particularly as the Commercial Cloud business continues to grow as a percentage of the overall mix.

Shareholders receive a 1.0% dividend. The Goldman Sachs price target is $315, and the consensus target is $243.33. Microsoft stock closed at $227.39 on Monday.

Salesforce

This company blew away Wall Street recently with a gigantic $27.7 billion purchase of Slack Technologies. Salesforce.com Inc. (NYSE: CRM) provides enterprise cloud computing solutions, with a focus on customer relationship management to various businesses and industries worldwide.

Salesforce’s enterprise cloud computing applications and platform services include Sales Cloud, which enables companies to store data, monitor leads and progress, forecast opportunities, gain insights through relationship intelligence and collaborate around sales on desktop and mobile devices.

The company also provides Service Cloud, which enables companies to deliver personalized customer service and support, as well as connect their service agents with customers on various devices, and Marketing Cloud, which enables companies to plan, personalize and optimize customer interactions.

Last year Salesforce completed the acquisition of Tableau Software, bringing together the world’s number one customer relationship management company with the world’s number one analytics platform. Salesforce aims to enhance its digital advertising value proposition (and its other existing product offerings) by expanding its data footprint to become the pioneer supplier of a consumer data platform for the corporate market.

The Goldman Sachs report noted this:

Salesforce remains poised to be one of the most strategic application software companies in the $1 trillion total addressable market cloud industry, in our view. With a broad and expanding platform that spans sales, service, ecommerce, marketing, Business intelligence/analytics, artificial intelligence, custom applications, integration, and collaboration, we view Salesforce as well positioned to capitalize on accelerated digital transformation spending, as enterprises across verticals grapple to form a holistic view of their customers across an increasingly complex customer journey involving multiple touchpoints and channels.

The $315 Goldman Sachs price target for Salesforce.com stock compares to the $274.71 consensus target and Monday’s $207.72 final print.


These three top stocks offer investors looking for technology, and specifically software, outstanding long-term growth potential. In addition, these companies are so dominant in their specific software silos that they will be next to impossible to dislodge by the competition.