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On Monday, Cantor Fitzgerald issued an industry report on the infrastructure and AI software sector, which has experienced a challenging period. The Software (ETR:SOWGn) ETF (IGV) recorded its fourth consecutive week of declines, dropping 2% over the past week and 15% from its peak on February 18, 2025. Leading software company NICE has seen similar pressure, with its stock down nearly 15% year-to-date according to InvestingPro data, though the company maintains strong fundamentals with a "GREAT" overall financial health score. The broader market, represented by the S&P 500 (SPX), also fell by 2.5% for the week and 8% since February 18, 2025.
The report highlighted that the performance of IGV was more in line with the SPX this week, hinting at a possible stabilization for software stocks. This comes after a period of significant underperformance compared to the broader market. Analysts noted that the market continues to face pressure from various macroeconomic factors, including tariffs, government spending, and recession fears, as well as from TMT de-grossing, which refers to the unwinding of momentum trades within the technology, media, and telecom sectors. Despite market volatility, InvestingPro analysis shows NICE maintains robust financials with a healthy current ratio of 1.7 and strong revenue growth of 15% in the last twelve months.
In terms of individual share performance, Cantor Fitzgerald observed that the best and worst performers within the sector were largely influenced by earnings reports. The ongoing software earnings season has been a driving factor, with security and idiosyncratic-driven infrastructure names leading the way year-to-date.
The report suggests that, despite recent downturns, there could be signs of a potential bottom forming in the software sector. This assessment is based on the comparative performance of the IGV against the SPX and the continued leadership of certain software stocks driven by unique company-specific factors. According to InvestingPro analysis, NICE appears undervalued at current levels, with strong fundamentals including a PEG ratio of 0.62 and robust free cash flow yield. Subscribers can access detailed valuation metrics and 11 additional ProTips in NICE’s comprehensive Pro Research Report, along with expert analysis of 1,400+ other top stocks.
In other recent news, NICE Ltd. announced a significant contract with the Fire Department of New York (FDNY) to modernize its digital evidence management systems, marking a substantial advancement in the department’s operations. Additionally, NICE reported a remarkable 400% increase in interactions with its CXone Mpower Autopilot in 2024, highlighting the growing role of AI in customer service. In financial updates, NICE’s recent earnings report revealed that while the Product segment performed well, cloud revenue fell short of expectations, prompting several analyst firms to adjust their price targets for the company. RBC Capital Markets reduced its price target to $200, maintaining an Outperform rating, citing challenges in cloud revenue and complex AI solution implementations. Similarly, Rosenblatt adjusted its target to $200 but kept a Buy rating, acknowledging the company’s strong position despite modest revenue growth projections. Cantor Fitzgerald also revised its price target to $161, maintaining a Neutral rating, noting strong performance in Financial Crime and Compliance but underwhelming cloud revenue. Mizuho (NYSE:MFG) Securities lowered its target to $185, maintaining an Outperform rating, and emphasized the need for improvements in deployment cycles and AI product contributions. These developments reflect NICE’s ongoing efforts to navigate market challenges while leveraging its technology innovations.
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