We recently compiled a list of the 10 Oversold Software Stocks to Buy According to Analysts. In this article, we are going to take a look at where Blaize Holdings, Inc. (NASDAQ:BZAI) stands against the other oversold software stocks to buy according to analysts.
As per The Business Research Company, a leading market research firm, the increased automation of business processes can fuel the growth of the broader software services market. The use of automation software remains a superior method of limiting costs where an opportunity lies to expand customer service while constantly reducing expenses. Therefore, the use of automation in business processes can improve the demand for software services market. Technological advancement remains the key trend that has been gaining popularity.
The Business Research Company believes that renowned companies operating in the software service market continue to develop innovative products, including cloud infrastructure platforms, in a bid to address larger customer bases.
What Lies Ahead for the Software Industry?
S&P Global expects that uneven global macroeconomic conditions might influence IT spending in 2025. That being said, the firm sees another year of strong software growth of ~10% in 2025 as compared to ~9% in 2024. This marginal acceleration in the rate sustains the growth trend of the previous 2-3 years, with some uplift expected due to AI-associated spending. The AI-related spending growth is expected to outpace that of overall software growth, although it will make up a smaller share—lower than 10%—of the total spending, which is expected to be in the range of $1 trillion – $1.2 trillion.
The firm expects that key drivers will include enterprise digital transformation initiatives, AI integration in software, and business automation workflows in a bid to enhance efficiencies, and a strong focus on cloud and network security, among others.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
AI To Help the Software Industry’s Growth
In 2024, software spending remained resilient, demonstrating the power of the recurring subscription model, although growth rates among smaller, sponsor-owned software providers were much lower, says S&P Global. The software segment (~10%) is expected to outpace the overall IT industry. While AI-associated gains remain nascent overall, the firm expects that continued strong growth among software vendors validates the strategy of offering productivity gains and reducing customers’ operational costs.
While the AI hype has not yet translated to significant software revenues for large SaaS companies, client interest remains robust. The companies believe that ongoing technological development and investment can result in deal activity. Therefore, S&P Global expects enterprise AI experimentation and interest to remain elevated, with new product rollouts garnering incremental growth and value-based average selling price increases for software vendors.
Our Methodology
To list the 10 Oversold Software Stocks to Buy According to Analysts, we used a screener to shortlist the stocks catering to the broader software sector. Next, we chose the ones that have declined significantly over the past 6 months and that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 14. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A business executive in a modern office looking over reports detailing artificial intelligence.
Blaize Holdings, Inc. (NASDAQ:BZAI)
% Decline Over Past 6 Months: ~57.1%
Average Upside Potential: ~109.2%
Number of Hedge Fund Holders: N/A
Blaize Holdings, Inc. (NASDAQ:BZAI) offers artificial intelligence (AI)-enabled edge computing solutions. DA Davidson analyst Gil Luria initiated coverage of the company’s shares with a “Buy” rating and a price objective of $10. As per the analyst, the increased decentralization of AI systems continues to stem from the need to process data closer to its source. Therefore, the analyst believes that Blaize Holdings, Inc. (NASDAQ:BZAI)’s solutions integrating hardware and software to enable on-device inference place it well to become a critical player in AI-enabled edge computing.
Blaize Holdings, Inc. (NASDAQ:BZAI) remains well-placed to capitalize on the rapid demand for edge AI. Its value proposition and solutions roadmap cater to high-performance compute demands for defense, smart city, and automotive customers, which led to the growing customer pipeline. For FY 2025, the company expects revenue of $19 million – $50 million, and for FY 2026, Blaize Holdings, Inc. (NASDAQ:BZAI) expects revenue between $105 million – $140 million, as solutions begin to get deployed.
The increase in AI workloads in industries such as automotive, retail, industrial automation, and healthcare results in a strong demand for efficient edge AI processing. Blaize Holdings, Inc. (NASDAQ:BZAI)’s Graph Streaming Processor architecture has been designed for low-power, high-performance AI inference, which makes it suitable for AI-driven software applications.
Overall BZAI ranks 6th on our list of the oversold software stocks to buy according to analysts. While we acknowledge the potential of BZAI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than BZAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
