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Let’s be clear about one factor. Schrödinger (SDGR) isn’t an AI inventory. That’s what they emphatically instructed us the final time we implied such a factor, and it’s admirable in an atmosphere the place each single firm is plastering “generative AI” throughout their investor decks in hopes of attracting extra {dollars}. What Schrödinger does is make the most of software program simulations to assist drug builders higher predict which novel molecules will efficiently go the FDA drug approval gauntlet. Their enterprise mannequin captures worth from software program licensing annual contracts (software program), and downstream royalties and milestone funds (drug discovery). After displaying robust double-digit development for the previous 5 years, Schrödinger might now see destructive development primarily based on the center of their 2024 steerage.
And that coincides completely with our annual check-in with one of many 37 disruptive tech shares we’re at present holding.
Software program Development Stalls
The drop in income development is a priority, particularly contemplating that all over the place we glance software program is remodeling how firms do enterprise. In SDGR’s year-end earnings name, the primary analyst out of the gate nailed it with a wonderful query. How ought to traders take into consideration SDGR’s software program steerage of 6% to 13% given a) the corporate’s previous robust income development and b) the latest industry-wide AI momentum?
These questions are necessary as a result of we will’t reply them wanting in from the surface. Whereas dru
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