In this article, we will take a look at the most profitable software stocks to buy right now.
The software industry has become one of the most powerful growth engines in the global economy. The companies belonging to this industry reshape how businesses operate, compete, and innovate. From cloud computing and AI to cybersecurity and enterprise automation, software companies continue to benefit from transformational trends.
In a June 30 publication by Reuters, titled “Tech selloff stirs bubble fears in US stock market,” the author highlights market concerns that the stock market may be in a bubble. Rising stock market valuations, volatility in the market value of mega companies, and episodes of sharp sell-offs are behind these growing worries, the article noted. Adding to these worries are debt-funded AI spending and a hawkish Federal Reserve.
Thanks to strong earnings growth, the S&P 500 price-to-earnings ratio is still below the elevated levels witnessed during the last bubbles. But some investors remain skeptical, the author added. The article advanced by citing the chief economic strategist at Annex Wealth Management, Brian Jacobsen, who said that even if the market is not flashing red flags just yet, investors should stay diversified.
“It does look like too many people are assuming fat margins and high growth rates are here to stay, while I’m a bit more skeptical about that outlook,” he added.
Given this outlook for the technology sector, we have compiled a list of the 10 most profitable software stocks to buy right now.
Photo by Hack Capital on Unsplash
Our Methodology
To compile our list of the 10 most profitable software stocks to buy right now, we used the Stock Analysis screener to filter for software stocks with market capitalizations exceeding $2 billion that reported operating and net profit margins over 20%. From this pool, we selected the 10 stocks with the highest trailing twelve-month (TTM) net income. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q1 2026.
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. Fair Isaac Corporation (NYSE:FICO)
Net Income (TTM): $759.63 million
Number of Hedge Fund holdings: 60
On June 9, Clear Street lifted the price target on Fair Isaac Corporation (NYSE:FICO) to $1,625 from $1,617 and reiterated a Buy rating. As highlighted by the analyst, the company’s $2 billion stock repurchase program represents 7% of total diluted shares outstanding and reflects its robust balance sheet. What’s even more noteworthy is the company’s capital-light business model, which enables management to be aggressive when the stock’s valuation is appealing, the firm added.
On the same day, Needham maintained a Buy rating on Fair Isaac Corporation with a price target of $1,650. This came after the company’s major share repurchase program. With the company’s strong margins and cash flow conversion, the firm sees a $1.5 billion term loan as manageable. Needham believes this announcement provides a favorable backdrop for management’s confidence in the company’s future.
Despite a negative one-year return, the company’s statistics point to a positive big picture. Fair Isaac Corporation has an impressive operating margin (ttm) of 58.19% and quarterly earnings growth (yoy) of 62.60%. Indeed, FICO is among the most profitable software stocks to buy right now.
Fair Isaac Corporation is a Montana-based provider of data analytics services focused on credit scoring. Founded in 1956, the company operates through two segments: Scores and Software.
9. Corpay, Inc. (NYSE:CPAY)
Net Income (TTM): $1.17 billion
Number of Hedge Fund holdings: 43
On June 30, Corpay, Inc. (NYSE:CPAY) announced that its Cross-Border business has signed an agreement with Fever, becoming the live-entertainment discovery and ticketing platform’s exclusive and Official Global Foreign Exchange Partner.
This collaboration will allow Fever to utilize Corpay Cross-Border’s innovative solutions to better manage foreign exchange exposure emerging from daily activities. As stated by Brad Loder, Chief Marketing Officer, Corpay Cross-Border Solutions,
“This partnership reinforces our position as the leading provider of corporate payments and currency risk management solutions within the live entertainment industry, while also expanding our global partnership program into the event ticketing space. We look forward to supporting Fever as they continue to grow their global operations.”
Back on June 3, Wolfe Research lifted the price target on Corpay, Inc. to $450 from $375. The firm’s meeting with management resulted in an incrementally constructive view of the company’s capabilities to drive sustainable growth, optimize operations, and return capital. The firm maintains an Outperform rating on the company. With a profit margin of 24.60%, CPAY remains one of the Most Profitable Software Stocks to invest in now.
Corpay, Inc. is a Georgia-based payments company that facilitates the management of vehicle-related expenses, lodging expenses, and corporate payments. Founded in 1986, the company also offers prepaid food and transportation vouchers and cards.
8. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Net Income (TTM): $1.17 billion
Number of Hedge Fund holdings: 66
As of June 30, Cadence Design Systems, Inc. (NASDAQ:CDNS) has a Buy rating from 85% of the analysts covering the stock, with the remaining 15% rating it Neutral. Among those bullish is Stifel, as the firm lifted the price target on the company to $432 from $395 and reaffirmed a Buy rating on June 9.
A testament to the company’s position at leading-edge process nodes is its Design Technology Co-Optimization collaboration with Intel Foundry. This multiyear project, targeting Intel 14A, enhances an already well-established relationship, the analyst highlighted. Stifel considers the announcement as highly positive for Cadence Design Systems, Inc. due to the value of its agentic AI tools and Design IP offerings.
The company’s year-to-date performance remains strong, with its return exceeding the S&P 500’s by a solid 10.52%. Cadence Design Systems, Inc. also maintains an impressive operating margin (ttm), return on equity (ttm), and quarterly earnings growth (yoy) of 29.70%, 20.66%, and 22.70%, respectively. No wonder CDNS is one of the most profitable software stocks to invest in.
Cadence Design Systems, Inc. is a California-based provider of AI-enabled software, hardware, and silicon intellectual property solutions. The company’s core offerings include functional verification services, a parallel logic simulation platform, an enterprise emulation platform, and a prototyping platform for chip verification.
7. PTC Inc. (NASDAQ:PTC)
Net Income (TTM): $1.25 billion
Number of Hedge Fund holdings: 42
As of June 30, PTC Inc. (NASDAQ:PTC) has a Buy rating from 61% of the analysts covering the stock, with a one-year median price target of $180, implying an upside potential of approximately 58%. Among those holding a balanced view is BNP Paribas. The firm started coverage on the company with a Neutral rating and a price target of $130 on June 18.
Back on June 11, PTC Inc. launched the PTC Orbit, a cloud-native asset intelligence solution that aims to connect the product as designed and the asset as maintained. The product uses AI to make asset information more accessible and actionable by joining PLM, ERP, CRM, IoT, EAM, and FSM systems into a single asset record.
“Asset data fragmentation is one of the most persistent barriers to operational efficiency in manufacturing,” said Eric Kaese, Field Service Management Lead, Deloitte. “With products like PTC Orbit, organizations have the opportunity to deepen capabilities, moving them from reactive decision‑making entities to more scalable, insight‑led operations.”
Although PTC Inc. has negative returns, the company’s strong financial metrics help offset the impact. With a profit margin of 41.57% and quarterly earnings growth (yoy) of 263.20%, PTC is one of the most profitable software stocks to buy right now.
PTC Inc. is a Massachusetts-based software company. Incorporated in 1985, the company provides a product development lifecycle management solution, an Industrial Internet of Things software, and a service lifecycle management solution.
6. Paychex, Inc. (NASDAQ:PAYX)
Net Income (TTM): $1.76 billion
Number of Hedge Fund holdings: 43
On June 25, JPMorgan raised the price target on Paychex, Inc. (NASDAQ:PAYX) to $105 from $100, maintaining an Underweight rating. The firm sees the company’s Q4 results as solid. With an operating margin (ttm) of 38.32%, PAYX remains one of the most profitable software stocks to buy right now.
On the same day, Kevin McVeigh, an analyst at UBS, trimmed the price target on Paychex, Inc. to $98 from $100. In its analysis, the firm highlighted that the company’s inaugural fiscal year May 2027 guidance reflects 5-6% total revenue growth. This represents the first year after initial integration following a deal, worth nearly $4.1 billion, completed in April last year.
UBS noted that the market was anticipating stronger revenue growth, mainly due to the enhanced cross-selling advisory offerings and bigger deal wins. Having said that, the firm is focused on the HUB alliance impact, which will help Paychex, Inc. generate additional revenue.
The firm also pointed to the WISE announcement, Workforce Intelligence, and expectations of future monetization opportunities as management continues to monitor the revenue growth momentum. UBS has a Neutral rating on Paychex, Inc..
Paychex, Inc. is a New York-based provider of human capital management solutions (HCM). Founded in 1971, the company offers payroll processing, employee payment, and retirement solutions, among other services.
5. Fortinet, Inc. (NASDAQ:FTNT)
Net Income (TTM): $1.95 billion
Number of Hedge Fund holdings: 52
On June 8, BofA lifted the price target on Fortinet, Inc. (NASDAQ:FTNT) to $180, up from $130. This followed the firm’s Global Technology Conference, where it hosted the company’s management. The analyst stated that demand remains strong, with no signs of pull-forward activity, and added that SASE and related markets are poised to become the next major growth drivers. The firm has a Buy rating on the stock.
Shaul Eyal from TD Cowen also raised the price target on Fortinet, Inc. to $160 from $125 on the same day, while reaffirming a Buy rating. As noted by the analyst, the company has a solid presence in its core markets, with AI providing the “next growth layer.” The ongoing investments in data center buildouts offer a “healthy backdrop” for even more core firewall spending, the firm noted.
Photo by Hack Capital on Unsplash
TD Cowen projects the current firewall market growth rate to surge from 5% to between 8% and 12%. This creates a favorable backdrop for Fortinet, Inc., which secures its spot among market leaders with a market share of more than 20%, the firm asserted.
Fortinet, Inc. is a California-based provider of cybersecurity and various networking and security solutions. Founded in 2000, the company offers its products to enterprises, communication service operators, and government institutions.
4. Palantir Technologies Inc. (NASDAQ:PLTR)
Net Income (TTM): $2.28 billion
Number of Hedge Fund holdings: 96
On June 24, Wedbush reiterated an Outperform rating and a price target of $230 on Palantir Technologies Inc. (NASDAQ:PLTR). In its analysis, the firm highlighted the company’s partnership with Zeta, which is focused on marketing infrastructure within the AI landscape. The collaboration will utilize Zeta’s AI-driven marketing cloud to help companies expand and retain their customer base.
According to Wedbush, Palantir Technologies Inc. is a key player in enterprise AI development. The firm believes the technology and value provided by the company reveal capabilities that many have yet to fully understand.
Despite its negative one-year return, Palantir Technologies Inc.’s growth metrics are exceptionally strong. The company has a solid profit margin of 43.67%, making it one of the most profitable software stocks to invest in. What’s even more impressive is the company’s quarterly earnings growth (yoy) of 306.70% and quarterly revenue growth (yoy) of 84.70%.
Palantir Technologies Inc., incorporated in 2003, is a Florida-based software platform provider for the intelligence community, supporting counterterrorism investigations and operations.
3. Adobe Inc. (NASDAQ:ADBE)
Net Income (TTM): $7.23 billion
Number of Hedge Fund holdings: 86
On June 29, Phillip Securities trimmed the price target on Adobe Inc. (NASDAQ:ADBE) to $203 from $385, while downgrading the stock to Neutral from Buy. Although legacy software-as-a-service “remains resilient due to its mission-critical nature and reliability,” the firm said company growth has lagged even with an early advantage in AI.
Phillip Securities noted that while AI adoption is advancing, its contribution to overall revenue will likely remain minimal in the years ahead. This contrasts with competitors that are already experiencing significant AI-powered monetization, the firm added. With that said, the firm expects only a modest upside in the near-term valuation outlook for the application software market.
Three days earlier, Piper Sandler reaffirmed a Neutral on Adobe Inc. with a price target of $240. This followed the company’s announcement that it had acquired Topaz Labs, a provider of AI models for video and image enhancement. While describing the company’s competitive environment as increasingly fierce, the firm said that M&A is the right strategy for the company in the AI and agentic era. With a profit margin of 28.69%, ADBE remains one of the most profitable software stocks to buy right now.
Adobe Inc. is a California-based technology company operating through Digital Media, Digital Experience, and Publishing and Advertising segments.
2. Oracle Corporation (NYSE:ORCL)
Net Income (TTM): $16.98 billion
Number of Hedge Fund holdings: 115
On June 24, Evercore ISI reaffirmed an Outperform rating on Oracle Corporation (NYSE:ORCL) with a price target of $245. This follows the company’s Form 10-K filing for FY26, which the firm believes provides greater revenue visibility.
A day earlier, KeyBanc maintained an Overweight rating and a price target of $300 on Oracle Corporation. The firm’s optimism is driven by the company’s strengthened expense outlook. After Q4 results, the firm also raised its EPS estimates for fiscal years 2028 through 2030, exceeding consensus for both FY29 and FY30.
While noting the company’s participation in AI hyperscaler infrastructure, KeyBanc said that it represents a meaningful cost of goods expense. The moderation in operating expense growth is sufficient to offset gross margin challenges, the firm added.
With an impressive operating margin (ttm) and ROE (ttm) of 36.20% and 53.38%, respectively, Oracle Corporation is among the most profitable software stocks to buy right now. This is reinforced by the stock’s 1-year consensus upside potential of 66.06%.
Oracle Corporation is a Texas-based company that provides solutions for enterprise information technology environments. Incorporated in 1977, the company offers Oracle Cloud SaaS, Oracle Health applications, Oracle cloud license and on-premise license, and Oracle license support services.
1. Microsoft Corporation (NASDAQ:MSFT)
Net Income (TTM): $125.22 billion
Number of Hedge Fund holdings: 282
As of June 30, Microsoft Corporation (NASDAQ:MSFT) stock has declined by approximately 19% in June. As highlighted by The Business Times on June 29, the company’s shares are entering their worst month since the dot-com era. This is due to investors’ concerns about the company’s position in the AI-driven landscape.
“Microsoft is getting hit on two sides with worries about both AI spending and AI disruption,” stated Jack Ablin, the Chief Investment Strategist at Cresset Wealth Advisors. “While it looks like a pretty good deal with the valuation so low, I’m getting the sense that investors are shooting first and asking questions later.”
What’s even more alarming is the company’s capex projections, as Microsoft Corporation forecasts US$190 billion in capex through the end of December. This is higher than the Street’s estimates. The company’s strong profit margin of 39.34% positions it as one of the most profitable software stocks to buy right now.
Earlier, on June 25, Stifel trimmed the company’s price target to $400, noting that Street FY27 gross margin estimates are on the high end. The firm noted the company’s mid-to-upper single-digit guidance for operating expense growth “given ongoing R&D investments.”
Microsoft Corporation is a Washington-based company operating through Productivity and Business Processes, Intelligent Cloud, and Personal Computing segments. Founded in 1975, the company provides software, services, devices, and solutions worldwide.
Hedge Fund Resource Center