MW These top-pick software stocks could deliver big gains in 2026, analysts say

By Emily Bary

Investors need to be selective when playing the choppy software sector, but analysts see compelling opportunity in some high-profile stocks and under-the-radar plays

Oracle's stock has been beaten down but could double from here, according to Jefferies.

Following a disappointing year for software stocks, investors still have to be choosy when playing the sector, analysts say.

D.A. Davidson's Gil Luria noted that "most software stocks were weighed down by AI concerns and AI rotations" in 2025, and he predicted that "2026 will continue the process of separating the winners."

And Jefferies analyst Brent Thill forecast "another year of gradual AI monetization, with more meaningful growth contribution/acceleration needed to ease AI disintermediation fears, thus requiring more selectivity."

So while Thill recommended that investors "stay underweight" the sector this year, he flagged some notable exceptions. His top picks in the software universe include some big names like Microsoft $(MSFT)$ and Oracle $(ORCL)$, as well as some less-discussed plays like Procore Technologies (PCOR) and Wix.com $(WIX)$.

See also: This could be a better - and safer - way into the AI trade in 2026

When looking at large technology companies, Thill said he sees Microsoft levered to "the broadest AI tailwinds." The company can benefit meaningfully both through its Azure cloud computing business and its Microsoft 365 software offerings, he noted.

"Importantly, Azure is set for another strong year as incremental capacityalleviates constraints on core and AI workloads, unlocking faster growth and reinforcing its role as a key engine alongside M365," Thill wrote. His target price is 43% above current levels.

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Meta $(META)$ is another top pick for him, as Wall Street estimates reflect "a low bar." Analysts think margins could compress by about 500 basis points due to the company's heavy artificial-intelligence spending, and consensus forecasts also factor in a roughly 3% slowdown in revenue growth, Thill wrote. In his view, those are beatable expectations, and he sees room for Meta's stock to rise nearly 40% to his $910 target price.

He's a major bull on shares of Oracle, which have lost more than 30% over the past three months due to fears about the company's debt and whether its customers will be able to live up to their commitments. Thill thinks there's "far more upside than downside" as Oracle chases an opportunity to grow its stature in the cloud, he said. Thill's $400 target price is approximately double current levels.

Thill's other large-cap top picks are Intuit and Atlassian. Shares of Intuit $(INTU)$, the maker of QuickBooks, are cheaper than the broader sector, Thill noted, and its "resilient" tax business puts it in a better spot than others in the industry. And he thinks Atlassian, the maker of collaboration software, could benefit from the rise of tools that make it easier for people to code.

Among midcaps, Thill recommended shares of Procore, Unity Software (U) and Wix.

Procore makes construction-management software and features a new CEO with a strong track record, according to Thill. And while Unity shares doubled in 2025, Thill thinks they can continue the positive momentum, he said, thanks to improvements in the company's advertising-targeting model, which could help fuel sizable revenue beats.

Meanwhile, shares of Wix, which makes tools for website creation, have lost about half their value over the past year, and Thill said he now sees "one of the most compelling turnaround stories" among its peer group. "The recent Base44 acquisition, a rising star in vibe coding, underscores Wix's proactive approach to integrating AI and staying ahead in the web-building market," he wrote.

D.A. Davidson analysts flagged other under-the-radar software plays as their top picks for the sector. Manhattan Associates (MANH) makes supply-chain software and can leverage its professional-services business to "disprove the negative AI narrative that has weighed on vertical software providers over the last year," analyst Clark Wright wrote.

He also likes Zeta Global Holdings (ZETA), which makes cloud-based marketing tools. The company has ample room to upsell customers and benefit from a drive to replace legacy offerings.

D.A. Davidson's Rudy Kessinger tabbed CommVault Systems $(CVLT)$, a cybersecurity company, which has been accelerating its growth in annual recurring revenue. And his colleague Lucky Schreiner likes observability play Datadog (DDOG), which could benefit from a "more complex" information-technology landscape, fueled by adoption of AI tools.

Read: AI slop is taking over the internet. And it's here to stay.

-Emily Bary

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January 05, 2026 10:39 ET (15:39 GMT)

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