Blackrock named software developers as beneficiaries of the AI revolution. Whose shares are worth buying?

The new technological revolution is moving to the next stage - from the development of AI systems to their widespread implementation, according to Blackrock analysts. Under these conditions, the beneficiaries of the AI boom are no longer only chip manufacturers and owners of cloud storage, but also software developers, who will become conductors of technology in all spheres of life, writes MarketWatch. 

The next stage of AI development will be associated with a dramatic growth in application scenarios, primarily in the software industry, and this penetration will cover all spheres of life, according to Tony Kim, head of the fundamental investment team in global technologies at BlackRock. He told MarketWatch this following BlackRock's annual five-day «technotour,» which included meetings with about 25 technology companies from Silicon Valley and San Francisco. According to the analyst's assessment, AI continues to grow rapidly despite concerns about the outlook for the U.S. economy, geopolitical risks or the emergence of cheaper-to-train models like DeepSeek. That said, companies that are already incorporating AI into software solutions are in a particularly favorable position, Kim says.

He notes that AI has not yet changed all the industries in which it can be used, not every user has a personal AI assistant yet, and not all employees of companies use AI agents in their workflows. That said, AI capabilities are growing rapidly, which means new use cases will emerge. Over time, the costs of developing and operating AI will also decrease, the analyst predicts.

There are two main categories in the software sector: business applications and consumer-oriented solutions. According to BlackRock, investors should pay attention to both areas.

Among consumer-oriented companies that could become beneficiaries of AI distribution, Blackrock names accounting software developer Intuit and education platform Duolingo. In the corporate segment, Kim singled out Salesforce, which provides customer relationship management systems, and Autodesk, a maker of design software.

- Intuit shares have strengthened by 24% since the beginning of the year, and 87% of analysts who track the company's dynamics recommend buying them. Wall Street expects Intuit's quotes to rise 4% from current levels.

- Duolingo stock is also up 24% this year. They are advised to buy by 60% of analysts, and the consensus price target suggests a rise of almost a quarter. 

- Salesforce capitalization has decreased by almost 19% since the beginning of January. That said, 81% of analysts recommend its stock as a buy. Their current price is 29.4% below the Wall Street consensus forecast.

- Autodesk shares are up 5.5% this year. 72% of analysts suggest investing in them, while the average target is 11% higher than current quotes. 

According to BlackRock's technology fundamental investment team, there are several reasons to focus on software developers now, early in the AI boom.

- They have their own unique datasets and can develop AI products based on them.

- The software sector is shaping advanced AI technologies that can be applied to any industry. In the center of demand right now is agent-based AI that can automate routine activities: managing inventory in warehouses, helping programmers write code, or assisting doctors in treating patients.

- Software developers can scale quickly because most of them rely on cloud storage rather than expensive physical infrastructure. This allows them to expand their customer base without significantly increasing costs. As a result, these companies tend to have higher margins.

- The subscription model under which software companies typically operate reduces investment risks because it makes cash flows more predictable.

This article was AI-translated and verified by a human editor