Live Markets: Software stocks: "Guilty until proven innocent"

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22/10/2025 10:44

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SOFTWARE STOCKS: "GUILTY UNTIL PROVEN INNOCENT"

European software stocks remain under scrutiny, with investors taking a "guilty until proven innocent" approach amid rising worries over AI disruption, according to J.P. Morgan.

Following around 60 investor meetings in Europe and North America, the bank says the "Death of Software" narrative is still a hot topic, though at this stage "perception matters more than reality for stock prices," says JPMorgan analyst Toby Ogg.

Key worries include the threat of AI-native new entrants and a shift toward consumption-linked pricing.

The central question: who will own the AI Agent layer?

If incumbents like SAP SAPG.DE or Sage SGE.L can dominate this space, they may see new growth via workflow automation opportunities. But if new entrants or in-house solutions prevail, traditional players risk facing growth pressure.

SAP remains J.P. Morgan’s top pick, thanks to strong earnings momentum and AI positioning.

(Danilo Masoni)

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EARLIER ON LIVE MARKETS:

MINERS' BOUNCE HELPS LONDON, TECH AND LUXURY SLIDE CLICK HERE

BEFORE THE BELL: MIXED START, L'OREAL MISSES, BARCLAYS UPBEAT CLICK HERE

INFLATION WILL WIPE AWAY UK'S RATE-CUT BETS CLICK HERE

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