© Reuters. 2 Buy the Dip Software Stocks for May 2021
Investors have been rotating away from tech stocks over the past couple of months to cyclical stocks to capitalize on an economic recovery. However, because the remote working culture continues globally—given its benefits—tech players Microsoft (MSFT) and Cadence (CDNS) are expected to grow significantly in the near term. So, we think it could be wise to buy the dip in these stocks.The technology industry has taken a backseat amid a fast-paced global macroeconomic recovery in which countries are focused on infrastructure spending and direct fiscal stimulus to boost their economies. The bullish recovery outlook for the U.S. has led to an increase in benchmark Treasury yields, which has in-part contributed to the tech sell off.
The economic recovery has incentivized investors to focus on outdoor stocks amid the proposed American Jobs plan spending. However, the tech industry is likely to regain momentum soon because most businesses are adopting cost-effective hybrid working models to maximize productivity. Companies have been buying state-of-the-art software to run their operations efficiently from remote locations. According to statistics, global software revenue is expected to grow at a 7.4% CAGR to total a $772.4 billion market by 2025.
Thus, we believe the current tech sell-off has created solid entry opportunities in quality software stocks such as Microsoft Corp (NASDAQ:) and Cadence Design Systems, Inc. (NASDAQ:).
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