META - Contrarian Alert: Is It Time To Look At Software Companies?

2024-07-16 04:50:00 ET

Summary

• The market expected quick interest rate cuts in late 2023, leading to a significant drop in the U.S. 10-Year Treasury note yield and a 28.03% return for the BVP Nasdaq Emerging Cloud Index.
• Software-as-a-service companies underperformed in the first half of 2024, with revenue growth decelerating.
• The focus has shifted to profitability with improved free cash flow margins.

By Christopher Gannatti, CFA

Remember November and December of 2023? The market was expecting a quick series of interest rate cuts from the U.S. Federal Reserve Open Market Committee.

• The U.S. 10-Year Treasury note ended October 2023 with a yield of 4.88% but dropped to 3.88% by the end of the year. ¹

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