State Street to Continue Buying Tech Dips, Veitmane Says

State Street Global Markets’ equity research head Marija Veitmane says AI-related software stocks have upside as analysts stabilize revenue and margin expectations. She also notes institutional investors are beginning to add from a large prior underweight position. Overall, the article frames improving positioning and expectation stability as supportive for software equities.

Analysis

The important signal here is not “AI is good for software” — it is that a crowded narrative may finally be flipping from infrastructure spend to monetization and earnings durability. If analysts are stopping the negative revision cycle while institutions remain underweight, software can rerate fast because positioning, not fundamentals, is the first marginal driver; that typically favors high-quality recurring revenue names and the IGV basket before it shows up in reported numbers.

Second-order, the winners are the vendors closest to workflow automation and seat expansion, not the names merely attached to AI branding. That argues for relative strength in large-cap application and infrastructure software with pricing power, while lower-quality, cash-burning “AI software” names are vulnerable if investors start demanding visible ROI and cleaner margin paths. The flip side is semis may pause if budget share rotates away from capex-heavy AI infrastructure toward application monetization.

Time horizon matters: a relief move can happen over days to weeks on positioning alone, but confirmation needs the next 1-3 earnings cycles to show stable margin assumptions and fewer estimate cuts. The move is probably invalidated if real yields back up materially or if management teams continue to frame AI as margin dilution without offsetting revenue; in that case, software’s multiple expansion stalls and the market reverts to the better-proven AI infrastructure trade. STT itself is mainly a sentiment read-through, not a direct fundamental beneficiary, unless this turns into sustained ETF and active flow into software funds.

Key Decisions for Investors

• Long IGV over a 4-8 week horizon as a positioning/revision trade; best entry is on any broad tech pullback, with upside to a mid-single-digit relative outperformance if software estimate cuts stop.
• Pair trade: long NOW / short SNOW into the next earnings window; NOW has clearer workflow monetization and margin visibility, while SNOW still needs proof that AI demand outweighs consumption-model friction. Use this only if you want a cleaner quality-vs.-story expression.
• Add a tactical long in CRM or MSFT on the first post-earnings guide-up from a major software bellwether; these names can re-rate first if management commentary confirms AI monetization is arriving faster than expected.
• Avoid chasing the lowest-quality AI software basket until there is evidence of margin stabilization in consensus estimates; if forward margins are still being cut, any rally is likely a short-covering bounce rather than a durable trend.
• Set a risk alert on 10Y real yields and next-quarter software guidance: if real yields move higher or recurring revenue growth decelerates again, cut the software overweight quickly because the rerating thesis will fail before the fundamental one does.