The adoption of Software-as-a-Service (SaaS) models by various organizations has been a major factor driving the technology industry’s rally over the past year. Also, we think the heightened demand for software solutions by industries such as healthcare and electric vehicles (EVs) positions Oracle (ORCL) and SS&C Technologies (SSNC) well for solid gains. So, let’s take a closer look at these two names.The digital transformation of most businesses has fueled the growth of the technology sector--especially the software industry--over the past year. This is evident in SPDR S&P Software & Services ETF’s (XSW) 58.2% gains over the past year compared to SPDR S&P 500 Trust ETF's (SPY) 46.7% returns.
Driven by the high productivity rates and low overhead costs during the COVID-19 pandemic, most companies are expected to continue working remotely and be part of the adoption of Software-as-a-Service (SaaS) trend. As a result, the global SaaS market is expected to grow at a 12.5% CAGR over the next five years to hit $436.90 billion by 2025.
In addition to cloud computing, electric vehicles (EVs), artificial intelligence (AI), and the healthcare industry should contribute to benefit from the heightened demand for software solutions. Given this outlook, we believe Oracle Corporation (NYSE:ORCL) and SS&C Technologies Holdings, Inc. (SSNC) are well positioned to deliver solid returns in the coming months.