Thematic Intelligence: Application Software Sector Scorecard Q2 2024 Update

Companies scoring well in the artificial intelligence (AI), big data, and cloud computing-related themes lead the thematic screen of the analyst’s application software sector scorecard. This screen is dominated by the large US cloud vendors (Microsoft, Amazon, and Alphabet) but also includes leading enterprise software companies such as IBM, SAP, and Infor, as well as Apple. There have been minor score changes in areas such as AI and cybersecurity, modestly benefiting companies like IBM and Meta.

Key Highlights

• Rapid developments in generative AI continue. The first half of 2024 saw an increased focus on training costs and carbon emissions, driving interest in open-source and smaller models. Hugging Face and Meta’s early lead in open-sourcing their large language models (LLMs) was followed by Databricks, Salesforce, H2O.ai, Mistral AI, Stability AI, Cerebras, Snowflake, and X.ai, among others. Competition is intensifying, particularly in access to AI chips, yet the long-term business model remains uncertain due to the open‑source emergence.
• The trade dispute between the US and China has not escalated further since our last update. Indications at the end of 2023 that China may be starting to make progress on domestic production of advanced semiconductors remain unconfirmed. As such, the leading Chinese vendors, including Huawei and Baidu, retain weaker thematic scores than their US counterparts due to their limited access to AI chips and advanced semiconductor manufacturing technologies. This continues to disrupt the competitive landscape in the application software market, as the inability to run AI algorithms in high-performance hardware will slow down China’s progress.

Scope

• This sector scorecard provides a top-down, comprehensive outlook for the key players in the application software sector over the next two years, based on the key themes set to transform their industry landscape.

Reasons to Buy

• Companies that invest in the right themes become success stories. Those that miss the important themes in their industry end up as failures.
• The analyst’s thematic research ecosystem is a single, integrated global research platform that provides an easy-to-use framework for tracking all themes across all companies in all sectors. It has a proven track record of identifying the important themes early, enabling companies to make the right investments ahead of the competition, and secure that all-important competitive advantage.
• At the analyst, we have developed a unique thematic methodology for ranking all major companies in all major sectors based on their relative strength in the big themes that are impacting their industries.
• Our thematic engine tags over 180 million data items across six alternative data sets-patents, jobs, deals, filings, social media, and news-to themes. The vast datasets within our thematic engine help our analysts to produce sector scorecards that identify the companies best placed to succeed in a future filled with multiple disruptive threats.