In this article, we will look at the 10 Best Software Stocks to Buy in 2026.
The S&P North American Technology Software Index has fallen around 10% over the past 6 months, mainly due to rising concerns that advances in AI could disrupt the software business. To discuss whether AI is a threat to the software business, Fernando Montenegro, Vice President & Practice Lead for Cybersecurity & Resilience at The Futurum Group, on June 10, appeared on a Schwab Network interview. He noted that AI is both a friend and an enemy of the software sector. He elaborated that AI is beneficial to the sector because it improves productivity. However, on the other hand, it is also disrupting the current market and business models. Montenegro highlighted that AI is not going to replace software; however, it will change the workflows of companies.
He added that for good software companies, AI has the potential to make an already good tool even better. However, for companies offering generic software, AI has the potential to replace those offerings pretty easily. So for investors, it is important to understand which software businesses are providing tailored and specific software for customers, as these companies are expected to come out as winners of this AI trade.
With that, let’s take a look at the 10 Best Software Stocks to Buy in 2026.
Our Methodology
To curate the list of Best Software Stocks to Buy in 2026, we used Finviz stock screener and Insider Monkey’s hedge fund database. Using the screener, we aggregated a list of software stocks sorted by market cap. Next, we ranked these stocks in ascending order of the number of hedge fund holders.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10 Best Software Stocks to Buy in 2026
10. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 86
Adobe Inc. (NASDAQ:ADBE) is one of the Best Software Stocks to Buy in 2026. Adobe Inc. (NASDAQ:ADBE) has declined around 14% over the past month. The major reason behind the decline has been the rising competition concerns from AI. Analysts have differing views on the company’s future outlook. Overall, the Street’s average 12-month price target suggests more than 11.5% upside from current levels.
On June 29, Phillip Securities downgraded Adobe to Neutral, slashing its price target to $203 from $385. The firm noted that the key concern behind the cautious rating is slowing core software growth. Phillip Securities highlighted that despite the company’s early AI investments, the revenue stream is expected to stay immaterial for years. The firm added that peers are already monetizing AI more meaningfully, and it sees little room for a near-term valuation rebound in application software.
On the other hand, just a few days later, on July 2, HSBC took a more bullish view and upgraded the stock from Hold to Buy, lifting the price target from $282 to $308. The firm argued that fears about generative AI disrupting Adobe’s business have gone too far. It pointed to strong fiscal Q2 results, reflecting 12.7% revenue growth and a 13.1% rise in remaining performance obligations, as evidence that customers are sticking with Adobe’s ecosystem rather than using AI-native rivals.
Moreover, HSBC also raised earnings estimates for 2026-2028 by 3% – 8%, citing operating momentum and buybacks, and noted the company’s AI push as complementary to its core software segment.
Adobe Inc. (NASDAQ:ADBE) is a provider of multimedia and digital marketing software such as Photoshop, Illustrator, and InDesign, among others. It also offers AI products such as Adobe Firefly and Adobe Sensei. The company was founded in 1982 and is headquartered in San Jose, California.
9. Palo Alto Networks, Inc. (NASDAQ:PANW)
Number of Hedge Fund Holders: 87
Palo Alto Networks, Inc. (NASDAQ:PANW) is among the Best Software Stocks to Buy in 2026. Recently, on July 1, BTIG raised the price target on Palo Alto Networks, Inc. (NASDAQ:PANW) from $333 to $380, while maintaining a Buy rating on the shares. Moreover, the firm also maintained the stock among its top picks across its entire coverage.
The rating comes after the stock has posted impressive 24.6% gains over the past month, driven by strong fiscal Q3 2026 earnings. BTIG noted that the firm’s industry checks suggest improving momentum across the company’s cybersecurity platform, with stronger deal sizes and growing cross-sell benefits. The firm noted that this momentum is driven by the company’s portfolio, which spans network security, cloud, endpoint, SIEM, observability, and identity.
The firm expects Palo Alto Networks, Inc. (NASDAQ:PANW) to sustain mid-teens growth with key drivers including continued expansion of the company’s platform and push into high-growth security markets like SIEM and identity.
Palo Alto Networks, Inc. (NASDAQ:PANW) is a leading cybersecurity company that provides a variety of products such as firewalls, malware protection, and cloud security.
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