The software sector continued to rebound sharply on Monday. Workday (WDAY) rose by 9% to close at $147.54. With shares trading at 40.95% below its 52-week high, the software firm has room to run higher.
Investors also bought Autodesk (ADSK), up by 7.7%, Salesforce (CRM), SAP (SAP), Intuit (INTU), and Adobe Systems (ADBE). They are betting that the AI hypergrowth will not compete with its subscription revenue growth. Still, AI companies are causing prices for server parts, server farms, electricity, and utility prices to rise. That also pressures software companies, raising their operating costs.
In the optical networking space, Lumentum Holdings (LITE) wiped out its recent rally near the $850 range. The stock closed at $711.96 yesterday. Corning (GLW) peaked at over $270 but closed at $143.36. Investors should also watch CIENA (CIEN), Applied Optoelectronics (AAOI), and Cisco Systems (CSCO).
The communications hardware providers are stuck in a downtrend. The nearly two weeks of U.S. bombing of Iran pushed investors to flee Nasdaq (QQQ) stocks. Investors accumulated Apple (AAPL) shares, which put its market capitalization higher than that of Nvidia (NVDA). Apple does not have meaningful investments in AI. By comparison, Amazon (AMZN) and Microsoft (MSFT) are spending heavily on AI hardware. As a result, AAPL stock offers the best hedge against AI investments not paying off for tech firms.
