The bull case for software growth in 2024

2024 could take shape shaping up to be a rebound year for software growth rates, helping both the biggest tech companies and startups.

After giving up critical gains, the clock wound back a few weeks and software stocks found themselves in a funk. Then new inflation data landed this week and ebullience returned. Key cloud and SaaS indexes quickly added value, while the broader but tech-heavy Nasdaq Composite opened at 13,745.96 on Monday. It closed at 14,094,38 on Tuesday, adding to that number today.

Investors were cheered because falling inflation makes it less likely that the US Federal Reserve will raise interest rates further. Even without rate cut downs, an end to rate hikes implies that some structural pressure on the value of tech stocks is coming to an end. Ditch the hope of a rate cut, and growth-oriented assets like tech stocks can become even more attractive.

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But what about the performance of the technology company itself? Can tech companies meet rising investor confidence in their value with future results that will defend or extend those gains?

The answer increasingly looks like yes. This is critically good news for startups; upstart tech companies that have faced a market in recent quarters that sought to cut costs rather than invest in new software; and investors are more hesitant to cut new checks while prices were fluctuating. A growth tailwind instead of the headwind that 2022 and 2023 have brought to startupland would feel like a climactic reversal. A nice breath of fresh air.

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What is the case for software growth in 2024? Several additive components, some derived from public company reports, some from startup datasets and venture expectations regarding AI. All in all, there are enough good vibes to indicate that tech growth will improve next year. Let’s talk about it.

Sunny data

An early indication that the market for selling software was changing came via Amplitude’s earnings. This statement particularly caught our attention: