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Is this one of those intuition-testing moments? Yes. Look, and I think you saw it with the 10% cost reduction. Behold, the golden child of this tech boom. This largely applies to memory chips in Korea. If you think about what happened with SK, and obviously Samsung, and SK overtook Samsung, Micron is such an important quarter compared to what we're seeing in terms of demand.
Ripple, what does it mean for Nvidia? Hyperscalers. But I keep checking our checks in Taiwan, in Korea, there are no cracks in the armor. And so I just continue to believe in third inning, first out from an AI game perspective . As Wall Street screeners flash red and panic selling grips the broader market, one of the most accurate tech bulls has just delivered a powerful wake-up call to bleeding portfolios.
Fresh off an intensive supply chain reality check in Taiwan and South Korea, Wedbush's Dan Ies says the market is not overvaluing artificial intelligence. He systematically underestimates him. Accurate data supports his opinion. Despite macroeconomic concerns, Asia's chip infrastructure is operating at full capacity, backed by a stable 6-8-week reserve of critical raw materials such as helium, protecting tech giants from short-term supply shocks.
There are no cracks in this fundamental demand. We are not at the peak of the bubble. Macroeconomically, we are only at the top of the third inning of a generational supercycle. The initial hardware- driven gold rush is transitioning into an aggressive enterprise monetization phase. While massive hyperscalers like Microsoft, Alphabet, and Amazon are finally moving forward, demonstrating real cloud revenue from AI deployments , exponential profits are hiding in plain sight in the enterprise software layer.
Ives was scathing about three undervalued software stocks poised to take advantage of this massive ripple effect. The first of these three goals was criticized for concerns about dark clouds associated with the anthropogenic environment, leading to an unfair sell-off. But now that the narrative dust has cleared, the stock has defied the skeptics, making a wild comeback from its lows to soar an impressive 85 % year-to-date.
Meanwhile, two other asymmetric positions have been unfairly dragged down by broader market noise, creating a gap in mispriced valuation that active investors cannot afford to ignore. Let's start with the first big discovery regarding software. PaloAlto Networks, trading under the ticker PNW, is a cybersecurity giant that has completely defied early skepticism.
Looking at the explosive share price performance, it's safe to say they've had a stunning rally, up more than 85% year-to-date to $332 per share, as the dust has settled on broader software concerns. This is not just an impulse. This is a fundamental transformation of the business model. PaloAlto has transformed from a traditional hardware firewall vendor into an absolute titan of integrated, AI-powered enterprise security, leveraging a large-scale enterprise migration to unified security platforms.
Looking beyond the headline numbers in their latest financial reports, organic financials indicate tremendous operating strength. The company's core annual recurring revenue from next-generation security , or NGSR, is growing 28% organically, reaching $6.5 billion, excluding recent acquisitions. The hypergrowth vectors in this portfolio are impressive.
Their cloud platform sassy is growing by 40%, reaching $1.6 billion. Meanwhile, XSIAM, their flagship AI-powered security operations platform , doubled its revenue year- over-year to exceed $600 million, and their specialized AI-powered security suite , Prisma Airs, tripled its customer base in a single quarter.
The ultimate indicator of future predictability is the company's order backlog. Organic performance commitment balances increased 22% to $18.4 billion, signaling that corporate clients are signing long-term, deeply embedded commitments. Financially, the business operates with elite efficiency , demonstrating an excellent Rule of 40 performance of 57 to 66% combined with a net retention rate of 120%.
The biggest catalyst here is massive valuation distortion. Management aims to reach a target of 20 billion by 2030. At today's market prices, investors are effectively buying this milestone only at a price that is 12 times future recurring revenue, well below historical trading ranges. For active investors tracking structural trends , this represents an elite secular player capturing the massive expansion of global cybersecurity.
Shifting our focus from cybersecurity to the absolute king of data analytics, the second stock on Dan Ives' radar is Palunteer Technologies. Trading under the ticker symbol PLTR, the company is what savvy investors recognize as a sharp pullback that is a huge gift in disguise. Palunteer has felt strong short-term pressure, down about 31% year-to-date to around $115 in recent stock pricing.
This correction was not due to a deterioration in fundamentals, but rather to short-term market noise, end-of-quarter rebalancing, and exaggerated concerns about European government contracts, which account for only a meager 10% of the company's total revenue. Under the hood , Palanteer's asset- free, highly replicable business model has an ironclad operational moat that hardware companies simply can't replicate.
While large language models are becoming commercialized, Palanteer's proprietary software infrastructure reflects the fundamental objects, workflows, and decision logic of the enterprise. Their flagship Artificial Intelligence Platform, or AIP, creates a secure deterministic environment that eliminates AI errors, allowing corporations and defense agencies to safely scale automated workflows.
Additionally, as the value of enterprise tokens increases, AIP helps clients optimize model selection, leading to significant efficiency gains and retaining clients within their ecosystem. The numbers proving the sustainability of this platform are simply impressive. In recent earnings reports, Palanteer boasted an incredible net dollar retention ratio of 150% .
This proves that existing customers are aggressively expanding their usage. Even more impressive is her staggering Rule of 40 score of 145%. This performance metric outperforms almost every major competitor in the software market today. This contributed to 11 consecutive quarters of revenue acceleration, supported by an exceptional adjusted operating margin of 60%.
This powerful financial engine led to a historic multiple compression. The forward price/earnings ratio is 87 this year, but it will shrink to 39 times by fiscal 2028. If Palunteer continues to aggressively expand its commercial customer base to 1,500 customers, it could easily secure a path to a 20x increase in revenue by 2030.
For forward-looking investors looking ahead to temporary macroeconomic fluctuations, this deep valuation compression provides an excellent entry point into the AI software leadership that has been going on for generations. Equally mispriced in current conditions is our third stock, Service Now, trading under the ticker symbol N O DO, a massive software developer that the market has wrongly dismissed despite accelerating fundamentals.
Short-term panic and a change in sentiment in the sector have caused shares to fall more than 32% since the beginning of the year, falling sharply from historical highs to a price of around $99. Bears are shorting stocks on a single, deeply flawed narrative that autonomous agent AI will vaporize its traditional job-based licensing model , but Wall Street is completely oblivious to the structural shift taking place beneath the surface.
Rather than suffer from demand disruption, Service Now is aggressively moving to a non-consumer-based model of jobs, where they get paid based on the actual automated work performed. In fact, non-consumption-based pricing for jobs already accounts for over 50% of their net annual value of a new contract, proving that this transition is working successfully in real time.
Far from being a victim of AI, Service Now functions as an indispensable action system that integrates the enterprise’s desperate workflows across IT, HR, and customer service. This creates high customer switching costs, which protects the business from corporate budget cuts. Furthermore, leading industry players have confirmed this model.
Nvidia management made a clear point about Service Now, noting that the global services economy is much larger than the software market, and that as AI agents perform more automated tasks, the underlying tools that capture the work are getting paid. To anchor this multi-agent economy, Service Now quickly built an AI control tower model through strategic acquisitions such as Move Works, Armis, and Vasa, tripling its total addressable security and risk market while growing its combined security division to over $1 billion with a 100% growth rate.
Financially, the underlying fundamentals completely contradict the market's concerns. Total outstanding commitments increased by 23.5% in constant currency , and their current outstanding portfolio is $12.64 billion, outpacing the 19% growth in subscription revenues. With an elite renewal rate of 99 %, subscription revenue for fiscal year 2026 is projected to grow to $15.77 billion, delivering a massive free cash flow margin of 36%.
This operational resilience has pushed Service Now's valuation down to the lowest multiple in public market history, trading at about 21 times adjusted earnings per share for fiscal 2026. Management even launched a $2 billion accelerated share buyback program in the first quarter to take advantage of this drastic stock mispricing.
As the market shifts from pricing legacy human-powered jobs to monetizing high-volume, automated workflows, this deeply compressed software titan represents an incredibly asymmetric long-term opportunity. While the broader market remains paralyzed by short-term volatility, underlying corporate data shows the AI software revolution is only gaining momentum.
For active investors, these three heavily undervalued technology leaders represent the best asymmetric opportunities to gain massive institutional-level growth before Wall Street finally wakes up.
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