As technology continues to evolve, companies must adapt their production operations to stay competitive. In this blog post, we’ll explore how security software is trading at a premium to broader software, the potential for AI to drive demand in Security, and HPE’s end-to-end portfolio across networking, compute, and storage. We’ll also examine BMW’s recent guidance cut due to China weakness and Europe restructuring, and how JBL is setting up well for fiscal 2027.

Security Software Premium:
GIR notes that security software is trading at a 65% premium to broader software, with 69% of respondents in their recent CIO survey expecting GenAI to increase their NTM security budgets. While the uplift is small, it’s increasing, indicating growing demand for Security solutions.

Potential for AI to Drive Demand in Security:
While there has been minimal AI upside in 1H company trends to date, GIR believes that AI will drive demand in Security moving forward. As customers push harder on efficiency and proof of value, Security solutions are likely to benefit from this trend.

HPE’s End-to-End Portfolio:
At HPE Discover, GIR gained a deeper understanding of synergies across HPE’s end-to-end portfolio. As customers seek to invest in AI infrastructure and simplify network operations, HPE’s portfolio is well-positioned to meet this demand. The company expects to exit FY’26 with a higher backlog than today.

BMW Guidance Cut:
Overnight, BMW materially lowers its FY26 guidance due to China weakness and Europe restructuring. GIR notes that 2/3 of the ‘cut’ were due to China and Asia-Pacific (AP) competitive intensity weighing on both volume and pricing. This reset pushes the Auto EBIT margin to a trough corridor historically associated with industry stress and a material downgrade to the current consensus.

JBL Fiscal 2027 Outlook:
Ahead of JBL’s 830am call, the stock is flat, with the company providing an update on its fiscal 2027 outlook. While revenue was at the higher end of guidance, EPS beat expectations, and the company notes that it feels “very good” about the setup for fiscal 2027.