Goldman Sachs launches a new emerging software investment guide in the United States: This year, head to these five small and medium-sized software themes for "gold mining".

Goldman Sachs Group, Inc. released a research report stating that in the software sector it covers, there is a clear trend of differentiation in various applications/vertical themes and end markets by 2024. Despite outperforming the market overall and achieving excellent performance, there is still significant performance variance among individual stocks. The report also highlights five small and medium-sized software theme stocks worth watching, which are expected to bring relatively good investment returns this year. The average performance of the stocks covered by the group outperformed the S&P 500 Index by 7 percentage points (a growth of 31% compared to the S&P 500 Index's 24%), but there is significant variance between the standout and underperforming stocks. Outstanding performers such as Q2Holdings (QTWO.US), Vertex (VERX.US), and Waystar Holding (WAY.US) had an average increase of 102%, while slightly underperforming stocks like SEMrush (SEMR.US), E2open Parent (ETWO.US), and Sprout Social (SPT.US) had an average decrease of 34%. As the debate in the software sector mainly focuses on the development and monetization of generative artificial intelligence technology stacks, especially for larger companies, the group will focus on five unique small and medium-sized software themes and believes that these themes are not fully understood by the market and could provide investors with unique risk returns by 2025. These themes are as follows: The impact of the European Corporate Sustainability Reporting Directive (CSRD) continues to expand, which may drive profit expectations higher for leading ESG software vendors. The group recommends buying Workiva (WK.US) with a target price of $133, offering a 26% upside; The increasing frequency of transactions in the Healthcare Revenue Cycle Management (RCM) sector, coupled with platform technology update cycles and improved healthcare utilization rates, are expected to benefit platform suppliers. Goldman Sachs Group, Inc. recommends buying Waystar Holding, with a target price of $44, offering a 19% upside; With the increasing importance of tax software in digital finance transformation budgets and the strong momentum of electronic invoicing in Europe, the competitive advantage of enterprise tax software suppliers is continuously strengthening. Goldman Sachs Group, Inc. recommends buying Vertex with a target price of $64, offering a 22% upside; The modernization cycle of banking technology, driven by catalysts over the years, has brought more transaction and monetization opportunities to cloud banking software platforms. It is expected that there will be a rebound in credit business in 2025, and the loan business software category, which faced challenges in 2024, will also benefit. Goldman Sachs Group, Inc. recommends buying Q2Holdings with a target price of $116, offering a 28% upside, and buying nCino (NCNO.US) with a target price of $42, offering a 29% upside; As generative artificial intelligence makes it more complex for companies to assess their digital competitiveness, the value of online visibility and data platforms is increasing. Goldman Sachs Group, Inc. recommends buying Similarweb (SMWB.US) with a target price of $16, offering a 13% upside.