Is Guidewire Software (GWRE) at a Turning Point?

Artisan Partners, an investment management company, has released its Q3 2024 “Artisan Small Cap Fund” investor letter. You can download a copy of the letter here. Small-cap stocks were strong in the third quarter, especially in July, when the Russell 2000 Index returned 10.2%. In the quarter, the Investor Class fund ARTSX returned 9.02%, the Advisor Class fund APDSX returned 9.04% and the Institutional Class fund APHSX returned 9.06%, compared to a return of 8.41% for the Russell 2000 Growth Index. The fund’s outperformance in the quarter was driven by positive stock selection within the healthcare and consumer discretionary sectors. In addition, you can view the fund’s top 5 investments to discover the best choices for 2024.

Artisan Small Cap Fund highlighted stocks like Guidewire Software, Inc. in its Q3 2024 investor letter. (NYSE:GWRE). Guidewire Software, Inc. (NYSE:GWRE) provides a platform for property and casualty (P&C) insurers. The one-month return of Guidewire Software, Inc. (NYSE:GWRE) was -13.10%, and the shares have gained 75.26% of their value over the past 52 weeks. On December 11, 2024, shares of Guidewire Software, Inc. closed. (NYSE:GWRE) at $170.69 per share with a market cap of $14.256 billion.

Artisan Small Cap Fund stated the following about Guidewire Software, Inc. (NYSE:GWRE) in its Q3 2024 investor letter:

“Our top contributors in the third quarter included Guidewire Software, Inc. (NYSE:GWRE), Verracyte and SharkNinja. Guidewire is the leader in next-generation property and casualty insurance software. The company’s software enhances modern underwriting and claims operations by supporting workflows, remote collaboration and rules-based decision making. It recently switched from a licensed software business model to a subscription-based cloud service. We’ve seen these transitions to cloud subscriptions before: they involve sacrificing short-term profitability for higher and more predictable long-term cash flows. As companies emerge from these (often messy) transitions, their earnings growth tends to accelerate. We believe Guidewire is at this inflection point. In an environment that was generally challenging for software, the company delivered strong earnings results, including annual recurring revenue growth of 14% and the signing of 16 new cloud deals.”

An insurance adjuster who reviews images and paperwork to process a claim.

Guidewire Software, Inc. (NYSE:GWRE) isn’t on our list of the 31 most popular stocks among hedge funds. According to our database, 51 hedge fund portfolios held Guidewire Software, Inc. at the end of the third quarter. (NYSE:GWRE), up from 43 in the previous quarter. Guidewire Software, Inc.’s total revenue (NYSE:GWRE) was $263 million in fiscal first quarter 2025, above the upper end of expectations and up 27% year over year. While we recognize the potential of Guidewire Software, Inc. (NYSE:GWRE) as an investment, our belief lies in the belief that AI stocks hold greater promise for delivering higher returns in a shorter time frame. If you’re looking for an AI stock that’s as promising as NVIDIA, but trades at less than five times earnings, check out our report on the cheapest AI stocks.

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