5 Stocks To Play The Major Trends Driving The Software Industry In 2022

The software industry is expected to benefit from a few major secular trends that will likely continue to drive growth in 2022, an analyst at Rosenblatt Securities said in a recent note.

These secular trends will likely remain in place for at least several more years until the majority of enterprise IT infrastructure, including applications and data storage, has been modernized and re-platformed to the cloud, according to analyst Blair Abernethy.

3 Major Trends Benefiting The Software Industry

Accelerating Digital Transformation: The Digital transformation that has been hastened by the COVID-19 pandemic will continue to accelerate, the analyst said. This includes developments such as deeper IT process automation and use of robotic process automation to bridge system gaps, cloud-based data storage and data engineering workflows, digital collaboration capabilities across businesses and their extended supply chains, next-gen ecommerce capabilities, IoT and the broader application and distribution of analytics, he added.

Shift To Cloud Architecture: Enterprises are rapidly re-writing and developing next-gen cloud-native applications that can take full advantage of containers, microservices, functions and serverless technologies at scale, the analyst said.

This is pursued to make the applications amenable for taking full advantage of containers, microservices, functions and serverless technologies at scale, he added.

"Data warehouses are being re-platformed to the cloud in order to cut costs, speed up access, scale, share and build next-generation data-driven applications," the analyst wrote in the note.

AI Proliferation: AI/ML will continue to rapidly evolve, automate and become further embedded into enterprise IT, Abernethy said.
AI is likely to be a key long-term driver of software application value proposition and innovation, he added.

Related Link: 3 Software Picks Poised For Accelerating Growth In 2022

Rosenblatt's Top Software Picks For 2022:

Altair Engineering Inc. ALTR: Altair stands to benefit from the convergence of engineering simulation, data analytics/AI, and high-performance computing, Abernethy said.

The analyst has a Buy rating and $85 price target for Altair.

Alteryx, Inc. AYX is a long-time leader in data analytics and is poised to significantly expand its product offering to the cloud in 2022 and broaden its AI/ML solution, the analyst said.

Abernethy has a Buy rating and $100 price target for Alteryx.

Autodesk, Inc. ADSK: Autodesk is at the forefront and well positioned for the digitization of the global AEC industry, leveraging its comprehensive BIM, design tools, Construction Cloud and Digital Twin product offering, Abernethy said.

The analyst has a Buy rating and $340 price target for Autodesk shares.

Elastic N.V. ESTC: Elastic, the analyst noted, is benefiting from digital transformations and the shifting of enterprise IT workloads to the cloud, which is driving demand for its core search business, the Abernethy added.

The analyst has a Buy rating and $185 price target for Elastic shares.

Splunk Inc. SPLK: Splunk is a long-time monitoring software leader with a rapidly growing cloud business, and it is high-grading its customers to its next-generation cloud-based Observability and Security solutions, Rosenblatt said.

"We expect Splunk to hire a new CEO in 1H22 and effectively complete its business model transformation by the end of 2022, which should result in faster revenue and cash flow growth," the firm said.

Rosenblatt has a Buy rating and $185 price target for Splunk shares.