[Click eStock] "US Stock Market Software Sector Expected to Show 'High in the Beginning, Low in the End' This Year"

Hana Securities forecasted on the 10th that the software sector in the U.S. stock market will show a pattern of strong performance in the first half of the year followed by a slowdown in the second half.

The software sector in the U.S. stock market has been sluggish this year. Last year, it experienced a correction in the first half and rebounded in the second half, but has been declining since mid-December. Kim Jae-im, a researcher at Hana Securities, stated, "Considering the slow pace of macro environment improvement and the pattern of strategically presenting conservative initial annual earnings forecasts, the weakness in software stock prices is likely to continue for the time being." However, he added, "Taking into account that AI (Artificial Intelligence) earnings differentiation and contribution will begin in the second half, a clear pattern of strong first half and weaker second half is expected this year as well."

Kim also commented on Palo Alto and Adobe, which have recently experienced poor performance. He evaluated, "Considering the demand stability in the security industry, the strong preference for integrated platform-type security providers in an environment of increasing IT costs, and the management’s excellent strategic execution and history of exceeding guidance, short-term stock price volatility may be high, but the high investment attractiveness remains valid in the mid to long term."

Regarding Adobe, he said, "The AI content creation-related competition issue, which has the greatest impact on Adobe’s investment sentiment, is unlikely to be resolved in the short term, so it will continue to be a factor of stock price volatility going forward." Nevertheless, he added, "I believe there is a high possibility of a rebound through upcoming quarterly earnings. Although competition remains a risk factor in the mid to long term, Adobe is expected to continue the 'beat and raise' pattern regarding this year’s earnings forecasts."