An AI-Rally for Software Makers Will Demand Investor Patience

Investors need more patience for the euphoria about artificial intelligence to lift the stocks of software makers.

At a time when surging demand for AI infrastructure are spurring traders to bid up hardware manufacturers such as Dell Technologies Inc. and Micron Technology Inc., software companies are having trouble convincing the market that similar growth is on the horizon.

The Philadelphia Stock Exchange Semiconductor Index has climbed 17% this year, supported by makers of chips and servers such as Nvidia Corp. and others tethered to AI. Meanwhile, an index of software stocks whose members include Adobe Inc. and Salesforce Inc. has gained less than 4%.

“We’re not seeing tangible lifts to earnings,” said Scott Yuschak, managing director of equity strategy Truist Advisory Services. “A lot of companies talk about utilizing and benefiting from AI, but we still need to see use cases and how willing their customers will be to pay. That clarity may not come until next year.”

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