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.
8. Shopify Inc. (NASDAQ:SHOP)
Number of Hedge Fund Holders: 88
Shopify Inc. (NASDAQ:SHOP) is one of the Best Software Stocks to Buy in 2026. The stock gained slightly, around 3% over the past month, after declining around 28% over the past 6 months.
The recent gains are due to some stabilizing market sentiment, and analysts project this recovery trend to continue through the next quarter, driven by capital returns and AI product integration. Analysts’ 12-month average price target suggests more than 25.5% upside from the current level.
Recently, on June 18, Citizens reiterated a Buy rating on Shopify Inc. (NASDAQ:SHOP) with a $150 price target. The firm noted that the rating is based on the company’s Spring 2026 Editions release, which included key updates such as upgrades to Catalog and the Universal Commerce Protocol, both aimed at building out agentic commerce infrastructure.
Citizens noted that the company is executing on its shopping everywhere strategy, which lets merchants reach customers across any surface, with standardized data built for both human and AI-agent interactions. The firm noted commerce’s end state remains uncertain, but Shopify is positioning its roadmap to serve consumers however they choose to shop.
The firm also sees Shopify as the de facto starting point for new merchants, with fresh tools helping retain and grow existing ones. It flagged rising software competition as coding assistants improved, but didn’t see that as a major threat.
Shopify Inc. (NASDAQ:SHOP) operates as a commerce technology company. The company offers tools to run, start, market, and scale businesses of different sizes globally. It is also involved in the sale of themes and apps, advertising on the Shopify App Store, point-of-sale hardware, shipping labels through Shopify Shipping, and Shop Campaigns for buyer acquisitions.
7. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 92
Intuit Inc. (NASDAQ:INTU) is one of the Best Software Stocks to Buy in 2026. Intuit Inc. (NASDAQ:INTU) has declined more than 8% over the past month, mainly due to valuation concerns and AI disruption fears. The Street has a bullish outlook on the stock, with analysts’ 12-month average price target suggesting more than 62% upside from the current level.
Recently, on June 25, Citi maintained a Buy rating on the stock with a price target of $591. However, earlier on June 18, Stifel downgraded the stock from Buy to Hold and lowered the price target from $375 to $275.
Stifel noted that the core concern behind the downgrade is that it expects management to lower long-term growth targets for TurboTax and Global Business Solutions at the September analyst day. This comes as the company shifts from years of aggressive price hikes toward more value-based pricing.
The firm noted that it sees TurboTax’s growth target dropping to 4% – 6% from 6% – 10%, mainly as lower-income customers get more price sensitive in the DIY tax-filing business. Moreover, for Global Business Solutions, the firm expects growth targets falling to 10% – 15% from the previous 15% – 20% range, due to softer momentum in QuickBooks, payroll, and especially Mailchimp. Stifel also trimmed its fiscal 2027 revenue and EPS estimates, while introducing a fiscal 2028 EPS forecast of $29.38.
Despite the downgrade, Stifel does not expect a sharp further sell-off and noted strong buybacks and a reasonable valuation.
Intuit Inc. (NASDAQ:INTU) is a global financial technology platform behind TurboTax, Credit Karma, QuickBooks, Mailchimp, and Intuit Enterprise Suite, serving about 100 million customers worldwide.
6. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 96
Palantir Technologies Inc. (NASDAQ:PLTR) is one of our Best Software Stocks to Buy in 2026. Recently, on July 2, DA Davidson upgraded Palantir Technologies Inc. (NASDAQ:PLTR) from Neutral to Buy and also raised the price target from $165 to $175.
The firm noted that the company has grown into its valuation, due to profits rising sharply and the stock multiple compressing. This has created what analysts call a timely buying opportunity. DA Davidson highlighted that the company holds several competitive advantages over its peers and noted that AI is only making these advantages more prominent.
A key point that the firm highlighted in its research note is Palantir’s ability to swap out the AI models underneath its platform. DA Davidson sees this as removing the biggest perceived threat to the business, which is the fear that customers would bypass Palantir and go directly to AI labs like Anthropic or OpenAI. The firm believes that the flexibility positions the company as a layer that customers use to orchestrate AI models generally.
Palantir Technologies Inc. (NASDAQ:PLTR) is a software company that develops and deploys data integration and analytics platforms for government agencies, defense organizations, and enterprise clients. Its notable products include Palantir Gotham, Foundry, and Apollo.
While we acknowledge the potential of PLTR to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PLTR and that has 100x upside potential, check out our report about the cheapest AI stock.
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