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Investing.com -- Software stocks fell sharply Tuesday as disappointing preliminary results from IBM (NYSE:IBM) rippled across the sector, pulling shares of major software companies lower. "The IBM update will deliver a devastating blow to software/services stocks as investors will worry about the capex pivot negatively impacting the whole industry, but the race to secure hardware raises its own set of worries," Vital Knowledge analyst Adam Crisafulli said in a quick comment. Following IBM’s update, investors reacted sharply to the cooling sentiment in the broader software space: Accenture (NYSE:ACN): Fell 7% ServiceNow (NYSE:NOW): Dropped 8% Workday (NASDAQ:WDAY): Declined 9.7% Salesforce (NYSE:CRM): Slipped 6% Atlassian Corp Plc (NASDAQ:TEAM): Fell 8.3% SAP SE ADR (NYSE:SAP): Sank 5.5% Adobe NASDAQ:ADBE): Fell 6.1% The decline is rooted in a fundamental shift in enterprise capital expenditure (capex) caused by a global memory supply shortage. Here is why this dynamic is specifically hurting software stocks: Capex Reprioritization: IBM reported that, toward the end of June, its clients—facing a supply-constrained market—shifted their spending away from software and general-purpose IT to "lock in" hardware like servers, storage, and memory. Because memory prices have spiked—exacerbated by intense demand from AI data centers—enterprises are exhausting their budgets just to secure critical hardware. The AI Tax on Enterprise Budgets: The industry is currently experiencing a "structural" memory shortage. Hyperscalers and AI infrastructure providers are consuming the vast majority of high-bandwidth memory (HBM) and DRAM production. As a result, when enterprises do manage to secure hardware, they are paying significantly higher premiums, leaving less room in their annual budgets for software renewals, licensing, or new digital transformation projects. Short-Term Revenue Headwinds: Investors are concerned that this is not an isolated issue for IBM. If large enterprise clients are delaying software purchases to prioritize hardware inventory—a trend referred to as "capex reprioritization"—it suggests a near-term revenue slowdown for the entire software-as-a-service (SaaS) and consulting sector. IBM’s revenue of $17.2 billion missed the $17.86 billion consensus, with non-GAAP EPS of $2.93 falling short of the $3.02 estimate. Beyond the hardware buying shift, the compan...

It has been about a month since the last earnings report for PTC Inc. (PTC). Shares have lost about 6% in that time frame, underperforming the S&P 500. Will the recent negative trend continue leading up to its next earnings release, or is PTC Inc. due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for PTC Inc. before we dive into how investors and analysts have reacted as of late. PTC reported second-quarter fiscal 2026 non-GAAP earnings of $2.69 per share, which jumped 50% year over year and beat the Zacks Consensus Estimate by 30.6%. Management had estimated non-GAAP EPS in the range of $1.87 to $2.47. Quarterly revenues increased 21.7% year over year to $774 million and surpassed the consensus estimate by 8.5%. Strong demand for AI-driven product lifecycle modernization, improving renewal rates and higher-duration renewals supported the upside. Management highlighted growing customer demand for AI-enabled industrial software, continued execution of its go-to-market transformation and a major capital return strategy centered around aggressive share repurchases. PTC’s “Intelligent Product Lifecycle” vision is gaining traction with customers, particularly as manufacturers modernize their product data infrastructure to prepare for enterprise AI adoption. The combination of AI-driven product strategy, disciplined execution, resilient cash generation and aggressive buybacks positions the company well for long-term growth. PLM and CAD businesses continue to experience solid growth momentum. In the fiscal second quarter, PLM revenues were $492 million, up 24% year over year. CAD revenues were $282 million, up 17% year over year. PTC continued to gain traction from its Intelligent Product Lifecycle strategy as customers increasingly modernize product data foundations to support AI adoption. At the end of the fiscal second quarter, constant-currency ARR excluding Kepware and ThingWorx rose 8.5% year over year to $2.39 billion, reaching the high end of management’s guidance. Management highlighted strong pipeline growth, improving sales productivity and rising deferred ARR for fiscal 2027 and beyond. The company noted that AI-related modernization demand remained strong across CAD, PLM and ALM offerings. Customers increasingly view product data systems as critical AI infr...

A month has gone by since the last earnings report for Microsoft (MSFT). Shares have added about 4.7% in that time frame, underperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Microsoft due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Microsoft reported third-quarter fiscal 2026 earnings of $4.27 per share on a non-GAAP basis (excluding OpenAI investment impacts), which increased 21% on a year-over-year basis and 18% in constant currency (cc). The figure beat the Zacks Consensus Estimate by 4.91%. On a GAAP basis, diluted earnings per share rose 23% to $4.27.Revenues of $82.9 billion increased 18% year over year and beat the consensus mark by 1.83%. At cc, revenues grew 15% year over year, showcasing strong demand for cloud and AI offerings.Microsoft Cloud revenues totaled $54.5 billion, up 29% year over year (25% in cc). The Microsoft Cloud gross margin percentage was 66%, declining from the prior year due to ongoing AI infrastructure investments and growing AI product usage, partially offset by efficiency gains in Azure and Microsoft 365 Commercial cloud.Commercial remaining performance obligation reached $627 billion, marking 99% year-over-year growth. Microsoft's AI business surpassed an annual revenue run rate of $37 billion, growing 123% year over year, encompassing revenue from customers building AI solutions on Azure, frontier model companies and first-party AI applications and services. Productivity & Business ProcessesThe Productivity & Business Processes segment generated $35.0 billion in revenues, representing 42.2% of total revenues. The segment grew 17% year over year (13% in cc), driven by strong performance in Microsoft 365 Commercial cloud.Microsoft 365 Commercial cloud revenues increased 19% (15% in cc). ARPU growth was again led by E5 and Microsoft 365 Copilot. Strong execution and improving product quality drove accelerating Microsoft 365 Copilot seat adds, which increased 250% year over year, representing the fastest growth since launch.Microsoft 365 Copilot paid seats now exceed 20 million. The number of customers with more than 50,000 seats quadrupled year over year, with Accentur...

It has been about a month since the last earnings report for Cadence Design Systems (CDNS). Shares have added about 17.4% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Cadence due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Cadence Design Systems, Inc. before we dive into how investors and analysts have reacted as of late. Cadence delivered a strong first quarter of 2026, driven by broad-based demand for its AI-oriented portfolio amid robust design activity. Non-GAAP earnings per share (EPS) of $1.96 beat the Zacks Consensus Estimate by 4.3%, increased 24.8% year over year and topped management’s guided range of $1.89 to $1.95. Revenues of $1.474 billion beat the Zacks Consensus Estimate by 1.7% and increased 19% year over year. The figure beat management’s guided range of $1.42-$1.46 billion. On the earnings call, the company emphasized its agentic AI strategy, including the launch of AgentStack and new AI Super Agents (ViraStack and InnoStack) that are designed to automate more of the chip design workflow. Cadence expects agentic tools to drive higher EDA consumption and usage across its platform as customers run more simulations, verification and implementation cycles.A standout metric was a record backlog of $8 billion, driven by strong bookings. Strong backlog and accelerating AI demand led to a raise in its 2026 revenue outlook.Cadence raised its full-year 2026 revenue outlook to a band of $6.125-$6.225 billion, compared with the earlier guided range of $5.9-$6 billion. The Zacks Consensus Estimate is currently $5.99 billion.Non-GAAP EPS for 2026 is now expected to be between $7.85 and $7.95, compared with the earlier guided range of $8.05 to $8.15. The Zacks Consensus Estimate is currently pinned at $8.16 per share. Cadence noted that the bottom-line performance would primarily be impacted by Hexagon’s Design & Engineering business acquisition, which will add about $160 million to revenues but would be dilutive to the bottom line by nearly 28 cents. The deal was funded using 70% cash and 30% stock. It expects the buyout to be accretive in 2027. Product & Maintenance revenues (91.5% of total revenues) of $1.349 billion rose 21.4% year over year. Services revenues (8....

Salesforce, Inc. CRM is scheduled to release first-quarter fiscal 2027 results on May 27. For the fiscal first quarter, the company expects total revenues between $11.03 billion and $11.08 billion (midpoint at $11.055 billion). The Zacks Consensus Estimate for first-quarter revenues is pegged at $11.06 billion, which indicates an increase of 12.5% from the year-ago quarter’s reported figure. CRM anticipates non-GAAP earnings per share in the band of $3.11-$3.13 for the first quarter. The consensus mark for non-GAAP earnings has remained unchanged at $3.12 over the past 60 days, which indicates a 20.9% increase from the year-ago quarter’s level. Image Source: Zacks Investment Research Salesforce’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 11.6%. Salesforce, Inc. price-consensus-eps-surprise-chart | Salesforce, Inc. Quote Our proven model predicts an earnings beat for Salesforce this time. This is because the stock has the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), which increases the chances of an earnings beat. Earnings ESP: Salesforce has an Earnings ESP of +1.40% at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Zacks Rank: CRM currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. Salesforce appears well-positioned to report strong first-quarter results, driven by its strategic focus on digital transformation and cloud solutions. With businesses globally undergoing digital overhauls, Salesforce's commitment to aligning its product offerings with customer needs is likely to have boosted its revenues for the quarter. The growing demand for generative AI-enabled cloud solutions has been a major catalyst for Salesforce. By embedding generative AI tools across its products, the company not only enhances customer engagement but also strengthens its competitive position in the customer relationship management space. This forward-thinking approach might have significantly contributed to its top-line growth during the to-be-reported quarter. Salesforce’s ability to deepen relationships with leading brands across industries and expand its reach in key geographic markets remains a cornerstone of its growth strategy. The company’s...

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance in the first quarter was heavily impacted by ERP stabilization challenges following the MRC Global merger, particularly within the U.S. upstream and downstream sectors. Management successfully migrated all Permian Basin operations to an optimized SAP platform, unlocking $40 million in previously inaccessible inventory to improve fulfillment speed. The revenue decline was highly concentrated, with nearly all year-over-year U.S. revenue losses attributed to approximately two dozen specific customer relationships. Midstream demand remains a strategic bright spot, fueled by natural gas infrastructure investments for LNG exports and power generation for data centers. The acquisition of Edge Controls enhances the Process Solutions business, providing application-driven automation technology that is fungible across energy and industrial markets. Management is utilizing the balance sheet to fund aggressive share repurchases, viewing the current valuation as a significant discount to intrinsic value caused by transitory ERP friction. Second quarter revenue is expected to grow sequentially in the mid- to high single-digit range, supported by ERP stabilization and recovery in the U.S. and International segments. Management raised the annualized cost synergy expectation to approximately $30 million for the first year, reflecting an accelerated pull-forward of integration activities. Full-year 2026 revenue is projected to approach $5 billion, with EBITDA margins expected to reach approximately 4.5% as temporary stabilization costs moderate. The company anticipates generating $100 million to $200 million in cash from operating activities for the full year, driven by inventory rationalization and improved collections. Strategic focus for 2027 shifts toward reclaiming market share and targeting $350 million in EBITDA through system optimization and expanded midstream exposure. Temporary ERP stabilization and remediation efforts are costing approximately $8.5 million per quarter in additional personnel, overtime, and system maintenance. Inventory step-up fair value amortization charges related to the merger contributed to a $44 million net loss in the first quarter. The International segment faced a difficult yea...

PTC Inc. PTC reported second-quarter fiscal 2026 non-GAAP earnings of $2.69 per share, which jumped 50% year over year and beat the Zacks Consensus Estimate by 30.6%. Management had estimated non-GAAP EPS in the range of $1.87 to $2.47. Quarterly revenues increased 21.7% year over year to $774 million and surpassed the consensus estimate by 8.5%. Strong demand for AI-driven product lifecycle modernization, improving renewal rates and higher-duration renewals supported the upside. Management highlighted growing customer demand for AI-enabled industrial software, continued execution of its go-to-market transformation and a major capital return strategy centered around aggressive share repurchases. PTC’s “Intelligent Product Lifecycle” vision is gaining traction with customers, particularly as manufacturers modernize their product data infrastructure to prepare for enterprise AI adoption. The combination of AI-driven product strategy, disciplined execution, resilient cash generation and aggressive buybacks positions the company well for long-term growth. In response to these strong trends buoying PTC’s performance, shares went up 7.2% in pre-market trading today. The stock has depreciated 17% compared with the Zacks Computer - Software industry’s 7.4% fall in the past year. Image Source: Zacks Investment Research PLM and CAD businesses continue to experience solid growth momentum. PTC Inc. price-consensus-eps-surprise-chart | PTC Inc. Quote In the fiscal second quarter, PLM revenues were $492 million, up 24% year over year. CAD revenues were $282 million, up 17% year over year. PTC continued to gain traction from its Intelligent Product Lifecycle strategy as customers increasingly modernize product data foundations to support AI adoption. At the end of the fiscal second quarter, constant-currency ARR excluding Kepware and ThingWorx rose 8.5% year over year to $2.39 billion, reaching the high end of management’s guidance. Management highlighted strong pipeline growth, improving sales productivity and rising deferred ARR for fiscal 2027 and beyond. The company noted that AI-related modernization demand remained strong across CAD, PLM and ALM offerings. Customers increasingly view product data systems as critical AI infrastructure, particularly in complex industrial workflows. PLM continued to outperform as customers consolidated product lifecycle management envir...

Fortive Corporation FTV reported first-quarter 2026 adjusted earnings per share (EPS) of 70 cents from continuing operations, which surpassed the Zacks Consensus Estimate of 64 cents. The bottom line increased 25.4% year over year. Revenues increased 7.7% year over year to $1069.4 million. The top line beat the Zacks Consensus Estimate by 3.8%. Core revenues jumped 5.3%. After the announcement, Fortive’s shares jumped around 1.5% in the pre-market trading session today. The stock has gained 24.2% in the past year compared with the Zacks Electronics - Testing Equipment industry's growth of 35.1%. Image Source: Zacks Investment Research Management stated that the company’s strong performance reflects robust demand for its market-leading products, steady progress in executing the Fortive Accelerated strategy and a continued focus on financial discipline supported by the operational rigor of the Fortive Business System (FBS). It added that the company remained committed to disciplined capital allocation, completing approximately $500 million in additional share repurchases during the quarter, bringing total buybacks to around $1.8 billion over the three quarters since the launch of the new Fortive. Fortive operates under the following two organized segments: Intelligent Operating Solutions: The segment generated revenues of $743.2 million (contributing 69.5% to total revenues), which increased 7.6% on a year-over-year basis. Advanced Healthcare Solutions: This segment registered revenues of $326.2 million (30.5%), up 7.9% year over year. In the reported quarter, adjusted gross profit increased 5.8% to $676.3 million on a year-over-year basis. Adjusted operating margin was 27.4%, which expanded 120 basis points (bps) on a year-over-year basis. Fortive Corporation price-consensus-eps-surprise-chart | Fortive Corporation Quote Segment-wise, the adjusted operating margins of Intelligent Operating Solutions were 32.3%, contracting 20 bps year over year. Adjusted operating margins of Advanced Healthcare Solutions were 24.1%, up 220 bps. As of April 3, 2026, cash and cash equivalents were $356.1 million compared with $375.5 million as of Dec. 31, 2025. FTV generated an operating cash flow of $220.4 million for the first quarter compared with $344.2 million in the previous quarter. Non-GAAP free cash flow was $193.8 million compared with $313.8 million in the prior quar...

Itron Inc. ITRI reported non-GAAP earnings per share (EPS) of $1.49 for first-quarter 2026, which beat the Zacks Consensus Estimate by 18.3%. The company reported earnings of $1.52 per share in the prior-year quarter. The year-over-year decline was due to lower interest income, partially offset by higher operating income. Itron reported quarterly revenues of $587 million, which declined 3% year over year but exceeded the upper end of guidance ($565-$575 million). The top line surpassed the Zacks Consensus Estimate by 2.8%. The revenue decline was largely due to portfolio optimization efforts and the timing of project deployments. Management stated that first-quarter results exceeded expectations, driven by strong execution and some projects progressing ahead of schedule, which led to a record gross profit. The company highlighted that utility customers remain focused on resiliency and affordability, with a structural, multi-year investment trend toward adding intelligence to the grid, an area well aligned with Itron’s strengths in networks, analytics and operational intelligence. Product revenues were $477.8 million (81.4% of total revenues), down 8.7% year over year. Service revenues totaled $109.2 million (18.6%), up 30%. Itron’s bookings were $476 million in the first quarter of 2026, and its backlog amounted to $4.4 billion at the end of the quarter. The first quarter included several key wins, including progress on a strategic grid visibility program with Duquesne Light Company. The engagement underscores rising demand for distributed intelligence and Grid Edge Computing as utilities modernize networks, while highlighting Itron’s ability to deliver an integrated solution combining smart devices, software and communications for next-generation grid operations. The stock has declined 21.8% in the past year against the Zacks Electronics-Testing Equipment industry’s rise of 32.9%. Image Source: Zacks Investment Research Device Solutions (21.2% of total revenues): Revenues fell 1% (9% in constant currency or cc) to $124.4 million primarily due to lower sales of legacy EMEA electricity products and reduced project deployments in North America. Networked Solutions (59.7%): Revenues dipped 13% (14% in cc) to $350.7 million, primarily due to the timing of project deployments. Outcomes (16.4%): Revenues rose 22% (or 20% in cc) to $95.9 million, driven by growth i...

Sensata Technologies Holding plc ST reported first-quarter 2026 adjusted earnings per share (EPS) of 86 cents, up from 78 cents a year ago. The bottom line beat the Zacks Consensus Estimate by 2.4%. Revenues for the quarter reached $934.8 million, up 2.6% from a year ago. The figure came near to the upper end of management’s expectations ($917-$937 million) and beat the consensus estimate by 0.7%. Strength Aerospace, Defense and Commercial Equipment segments drove the top-line performance. Following the announcement, shares of ST lost around 3% in the after-market trading session yesterday. In the past year, shares have gained 97% compared with the Instruments-Control industry’s growth of 12.7%. Image Source: Zacks Investment Research Management stated that the company’s first-quarter performance met or surpassed expectations across all key metrics, reinforcing the strong momentum it is building. Management also highlighted that disciplined execution across the organization, along with an effective productivity engine, is driving results. Additionally, the company’s strategic initiatives are gaining pace, while its growth opportunities remain solid and promising. Sensata has realigned its structure into three operating segments — Automotive, Industrials, and Aerospace, Defense and Commercial Equipment, which are now reflected as its new reporting segments. Automotive revenues (56.1% of total revenues) decreased 0.8% (up 0.7% on an organic basis) year over year to $524.8 million. The Automotive segment outperformed overall market production by roughly 4%. Segmental adjusted operating income was $123.2 million compared with $120.3 million in the prior-year quarter. Industrials revenues (19.7% of total revenues) were $184.2 million, down 0.8% (up 0.7% on an organic basis) year over year. The Industrials segment delivered organic growth despite softness in its end markets. Segmental adjusted operating income was $50 million compared with $48.5 million in the prior-year quarter. Aerospace, Defense and Commercial Equipment revenues (24.2% of total revenues) were $225.8 million, up 14.8% (up 16.7% on an organic basis) year over year. The Aerospace, Defense and Commercial Equipment segment showed broad-based year-over-year strength, with both Aerospace & Defense and Commercial Equipment delivering double-digit growth. Segmental adjusted operating income was $63.5 mi...

Seagate Technology Holdings plc STX reported third-quarter fiscal 2026 non-GAAP earnings of $4.10 per share, beating the Zacks Consensus Estimate of $3.50 and exceeding the high end of management’s guidance of $3.40 (+/- 20 cents). The bottom line expanded 115% year over year and 32% sequentially on the back of STX’s strong execution of its strategic objectives and effective use of the technology roadmap to support growing demand. Non-GAAP revenues of $3.11 billion exceeded the Zacks Consensus Estimate by 5.7%. Revenues also surpassed the high end of guidance, increasing 44% year over year. STX is operating in a very strong demand environment, especially in data center markets. Management noted that the shift toward inference-driven workloads, agentic AI and multimodal applications is leading to exponential growth in data creation and storage needs. Seagate Technology Holdings PLC price-consensus-eps-surprise-chart | Seagate Technology Holdings PLC Quote The March quarter witnessed steady growth in high-capacity nearline drive demand across global cloud and hyperscaler customers. Nearline products accounted for roughly 90% of total exabyte shipments, with capacity largely allocated through calendar 2027. Modern data centers increasingly need solutions that balance performance with cost efficiency, a trend that strongly favors Seagate’s roadmap. The company’s areal-density-driven strategy aligns well with the long-term growth of AI-generated data, suggesting sustained demand beyond short-term cycles. The company’s HAMR (Heat-Assisted Magnetic Recording) technology and Mozaic platform remain central to its long-term growth strategy. It began revenue shipments of Mozaic 4 in late March, which can deliver up to 44 terabytes per drive, representing more than 30% higher capacity compared with the first-generation drives. Seagate noted that Mozaic 4+ is projected to constitute the majority of its HAMR exabyte shipments exiting calendar 2026. With the development of Mozaic 5 underway, STX targets to commence qualification shipments of the same in late calendar 2027. Image Source: Zacks Investment Research Following a robust business performance, STX’s shares are up 15.3% in the pre-market trading today. In the past year, shares have gained 536.1% compared with the Zacks Computer-Integrated Systems industry’s rise of 158.1%. Beginning first-quarter fiscal 2026, STX r...

Shares in SAP were rallying on Friday after the German tech company reported better-than-expected first-quarter profit and reiterated its 2026 cloud revenue outlook, with a caveat. The company continues to expect 2026 cloud revenue of between €25.8 billion and €26.2 billion.