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Since the start of this year, the software sector has faced a consistent sell-off. The narrative is that AI is going to wipe out a lot of enterprise software companies. The market has bought into this narrative so heavily that even a company like Salesforce (CRM) has taken a hit. The stock is down 28% YTD, trading at a massive discount. The non-GAAP forward P/E of 13.5x is nearly half the IT sector average forward P/E. A stock that led its peers now finds itself trading at half its value, which says a lot about the negative sentiment.
Are things really that bad? I don’t think so. There is an opportunity to buy a great business with solid fundamentals that has become disconnected from the share price.
