Software stocks rebound selectively as AI-driven demand reshapes data center buildout and spending.

Jefferies analysts report a selective rebound in software stocks, highlighted by strong earnings from companies like ServiceNow, SAP, and Atlassian. This recovery is driven by early AI monetization signs and robust demand for data center infrastructure, despite bottlenecks in power, labor, and permitting. Data center vacancies remain extremely low, and lead times for critical equipment extend to 4-5 years, indicating sustained capital expenditure by major tech firms. Leadership changes at Google’s DeepMind do not impact its AI strategy, with Jefferies confident in Google's long-term AI leadership due to its data assets and integrated platform.