I pulled some data from Koyfin to determine where average software multiples for growth stocks lie against their 7-year history. Jamin Ball from Altimeter Capital had been putting up similar graphs on Twitter, but I thought I'd compute the numbers from my personal investment universe of software stocks.

I included the Median EV/Sales (Next Twelve Months) multiples from about 29 existing public names in growth-oriented software. These span applications, SaaS, cybersecurity, infrastructure, productivity, etc. Compared to software ETF indices, I'd say that my list leans towards more growth-biased businesses. There's no $IBM and $CSCO here.

Some of these names were not public in 2015-2017 and were excluded as data points for this graph. Anyway, here it is:

I recall 2017 being a goldilocks period for the market where multiples were neither too expensive nor cheap. Since then, however, there's a very strong argument for higher valuations considering the sheer speed and execution of growth for the cloud transformation crop.

Interest rates might be high, and inflation could continue to be painful, but I'm pretty confident investing in this space - partly because so many names have shown remarkable fundamental resilience in the last earnings season. The reinforcing theme is that a lot of software is mission critical and isn't just complementing operations - it is operations for any modern enterprise.

It's time to get greedy here for long-term investors. Software is eating the world.