Expectations for software companies are higher now that their stocks have been outperforming. However, analysts have identified several top picks whose results could stand out.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on MarketWatch ↗
Keywords
Open a keyword to see other news on the same topic.
Related tickers and likely impact
MSFT
▲ Likely positiveMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 10/27/2026 | 531.33 |
| Change that session | -0.24% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- Zeta Global and Commerce stocks trade down, what you need to know
Zeta Global and Commerce shares fell 6.1% and 6%, respectively, in an afternoon session after underwhelming earnings from Amazon and Intel, which followed mediocre reports from Alphabet and ServiceNow, fueled worries about heavy AI spending and cash burn. CNBC reported the selloff spread across technology and hardware stocks, with investors questioning when AI infrastructure investments will produce meaningful revenue and profit growth. The article notes Zeta Global is highly volatile, with 50 moves greater than 5% over the past year, so the market appears to see this news as meaningful but not a fundamental change. Separately, CNBC reported investors were rotating from semiconductors into high-growth software, citing a ballooning U.S. fiscal deficit, higher inflation and slower AI infrastructure spending next year.
- Microsoft's Windows sales fell 22% as PC prices climb
Microsoft's cloud business continues to grow strongly, but its latest results show fewer people buying Windows PCs as higher memory costs push device prices up.
- 4 Turnaround Stocks to Buy Before 2026 Is Over and Hold for a Decade
The article reviews four software stocks that fell sharply in recent years but each grew revenue at least 18% in its latest quarter and rallied at least 38% over six months as of Oct. 16. Duolingo (DUOL) is down 57% over the past year and trades at 17 times trailing earnings, with revenue up 18.3% and about 18% of its float sold short. Monday.com (MNDY) is down 49% over the past year, has a market cap of $3.8 billion and trades at 38.3 times earnings, with revenue up 21.9% and 16% of its float shorted. Unity (U) has recovered after scrapping its unpopular 2023 install fee, with revenue up 23.9% and its stock up 54% over six months. GitLab (GTLB) has soared 145% over six months, with revenue up 21.3%, and sits 10% below its 52-week high.
- Stock Market Today: Tech Pressured By Alphabet Report; Software Stocks Sink (Live Coverage)
The Nasdaq sold off on Thursday after a key inflation reading and third-quarter GDP data. Alphabet shares plunged on its earnings report.
- Social Buzz: Wallstreetbets Stocks Mixed Pre-Bell Thursday; Lumentum to Advance, ServiceNow to Decline
- Microsoft Stock Could Be Closer to Its Next Big Breakout Than Investors Think
Microsoft trades at $531.47 on October 20, 2026, and 24/7 Wall St. sets a 12-month price target of $649.73, implying 22.3% upside with a buy rating. The rebound followed a strong fiscal fourth quarter in which revenue rose 17.75% to $90.01 billion, EPS of $4.74 beat the $4.24 consensus, Azure grew 43% and commercial RPO jumped 84% to $678 billion. The CFO says customer demand exceeds available capacity, and analyst ratings stand at 14 Strong Buys, 39 Buys and 2 Holds with no Sells. Risks include fiscal 2026 capex rising 79.62% to $115.95 billion, free cash flow falling 6.46%, and RPO excluding OpenAI growing only 25%. The bull case reaches $754.68, while the bear case is $548.92.
Related markets
Latest news
- SpaceX Is Up 37% From Its August Low. A $5,000 Investment Could Be Worth This Much by 2028.
SpaceX (SPCX) shares, which listed at $150 in June, surged above $225 before a sharp sell-off pushed them near $100, and have since rebounded more than 37% from August lows to roughly the IPO price. The author argues AI is now the key driver, citing the xAI acquisition before the IPO, the Cursor acquisition, rising Grok subscriptions and the Grok Bots AI agent platform, while investors had focused mainly on the Starlink-driven Connectivity unit. Q3 revenue grew 830%, from $813 million to $7.56 billion, versus 69% growth in Connectivity and 6% in Space. On the Q3 conference call, CEO Elon Musk said revenue could reach $500 billion to $1 trillion by 2027. Assuming $500 billion in revenue in 2028 and 10x sales, the author estimates a valuation of about $5 trillion, implying a $5,000 investment could grow to $12,500.
- Anthropic's Gross Margin Rocketed to 85% From 12% in a Year, but the S-1 Warns It Won't Last
Anthropic has filed its public S-1, showing first-half 2026 revenue of $16.3 billion, roughly 14 times the same period a year earlier, which implies a gross margin of about 85%, up from 12%. Including research and development and sales and marketing costs, its GAAP operating margin was 8% in Q2 2026. The company warns margins may fluctuate, since it contracts for compute 12 to 18 months ahead and has about $417 billion in future minimum payment obligations, while most customer spending is consumption-based. Anthropic reportedly plans to raise up to $100 billion at a $1.5 trillion to $2 trillion valuation, which the author calculates would be about 63 times annualized first-half 2026 sales at $2 trillion. The author also expects the stock may debut with an expensive valuation.
- 3 Major Risks With Anthropic's IPO
Anthropic has filed its IPO prospectus, in which management claims a $40 trillion total addressable market and revenue growth of 1,300% in the first half of the year versus the same period of 2025. The article highlights three risks: competition from Gemini, ChatGPT, low-cost models like DeepSeek and on-device AI; rising compute costs, with $265.6 billion in future commitments under some agreements and more than $500 billion estimated for others; and a capital structure in which a founding-team LLC holds one share carrying 50.1% of voting rights, which may limit Class A shareholders' influence over key decisions, including a change of control. In Q2, compute and infrastructure expenses rose 300% against 1,368% revenue growth, a gap the author says may not last.
- Anthropic's path to the Nasdaq just got a lot bumpier
Anthropic unveiled its IPO prospectus just as Microsoft, Google and Amazon reported quarterly results that deepened concerns over AI spending. The prospectus showed an $80 billion net loss for the first half of the year, hundreds of billions of dollars in compute commitments and more than 90 pages of risk factors. All three hyperscalers issued capex figures or forecasts below analysts' estimates, with Microsoft cutting its forecast to $170 billion from $175 billion. Free cash flow was negative $42.4 billion for Amazon over the trailing 12 months and negative $9.1 billion for Google, while Microsoft plans to raise $25 billion in bonds. The Nasdaq Composite fell 2.9% on Friday, its first three-week losing streak since March.
- Social Security's Trump Bump-Led 2027 COLA Is Doing Something That Hasn't Been Witnessed This Century
The Social Security Administration announced a 3.6% cost-of-living adjustment (COLA) for 2027 on Oct. 14, tying for the fifth-largest annual raise since 1993. Inflation hit a three-year high of 4.2% in May, which the article attributes largely to two policies of President Trump: tariffs and the Iran war, which led Iran to close the Strait of Hormuz to most commercial vessels and sent gas and diesel prices sharply higher. Citing a New York Fed study, the article says tariffs added 2.9 percentage points to goods price inflation by February 2026. The 2027 raise would also be the sixth consecutive year that benefits rise at least 2.5%, a streak last seen between 1988 and 1997.
- The AI trade's trick-or-treat earnings season
The latest round of hyperscaler earnings has unsettled Wall Street. Both bulls and bears now have evidence to support their most optimistic or most pessimistic views on the AI trade.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.