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Amid a robust earnings season and propelled by artificial intelligence, the software industry shines as the epitome of quality growth.
In a recent US Equity Strategy report, Morgan Stanley analysts dissected the performance breadth and earnings revisions breadth across sectors, with software emerging as the frontrunner in both aspects.
The sector’s distinguished performance remained unwavering, positioning it as a leader within the domain of quality growth.
“As earnings season progressed, corporates demonstrated a renewed emphasis on operational efficiency,” highlighted the analysts.
A soaring reference to “operational efficiency” in earnings transcripts reflects companies’ intensified focus on cost discipline and investments in game-changing technologies like artificial intelligence, designed to drive productivity gains.
“There’s a notable convergence between the sectors predominantly discussing operational efficiency and those delving into AI-related conversations. These groups encompass software, professional services, health care services, and financial Services,” the analysts underscored.
The elevated prominence of operational efficiency has coincided with strong sector outperformance, particularly following the surge of interest in AI during the second quarter of 2023. Recognized as an extension of the quality factor, operational efficiency stands to benefit these sectors, according to Morgan Stanley analysts.
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