When Goldman talks, investors listen. For example, in April, a Goldman analyst warned of a "super-spike" in oil prices and indicated that oil could reach $105 a barrel. On the news, oil did, in fact, spike.
Well, Goldman made another interesting call: This week, the firm got bullish on the software sector. Don't expect a super-spike in prices, but Goldman lifted its outlook from "neutral" to "attractive."
Why the upbeat news? Isn't software a mature industry?
Goldman analyst Rick Sherlund thinks that the Internet is leading to new models of software for the enterprise. This Internet-centric approach is known as Web services.
Essentially, Web services allow computers to talk to each other regardless of hardware and operating systems. This is done by software companies adhering to various standards (with such names as XML, UDDI, SOAP, and so on). This makes it easier for developers to build new applications. Actually, Sherlund calls this the "next big thing."
Sherlund believes that the beneficiaries will be the large software companies such as SAP
However, he thinks it could take several years. While there has been cooperation among the big software companies -- such as that between Sun Microsystems
So, if Web services are the "next big thing," why not buy today's innovative leaders in the space? One that stands out is Salesforce.com
Fool contributor Tom Taulli does not own shares mentioned in this article.