In this article, we will look at some small-cap software names that are oversold and offer attractive upside potential for investors.
On April 14, Jeff Kilburg, Founder and Chief Executive of KKM Financial, appeared on CNBC’s Power Lunch to discuss the current dynamics shaping the technology sector. He said that there has been a noticeable disparity in the industry during 2026, where the semiconductor and software segments have taken opposite paths. According to Kilburg, although the semiconductor industry has been doing extremely well, the software industry has been overlooked and is now witnessing a comeback.
Kilburg pointed to a roughly 50% dispersion between the IGV software exchange-traded fund and the SOX semiconductor index year to date, highlighting selective opportunities in software names like Oracle. He also flagged Intel as a standout performer, noting the stock has climbed 60% and could log its 10th consecutive positive session, an event that has not occurred in 21 years. The rally has been fueled by a government stake acquired around $20 last August and Intel’s new foundry partnership with Tesla. Kilburg sees further upside as Intel’s foundry business scales from $300 million in revenue to a potential $2-3 billion, positioning the company as a credible challenger to Taiwan Semiconductor.
The bottom line is obvious: tech investors need to be picky, knowing which areas are driving an insatiable demand for chips through artificial intelligence and looking for the right places where software stocks have been overlooked. With that background, let’s explore our 10 Oversold Small-Cap Software Stocks Offering Massive Upside.
Photo by Lucas Law on Unsplash
Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed software companies with market capitalizations between $200 million and $2 billion. We further narrowed our search to identify stocks with an RSI below 30. Also, we only shortlisted stocks with at least 35% upside potential, according to consensus, as of the April 16 close. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
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. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
10. PagerDuty Inc. (NYSE:PD)
PagerDuty Inc. (NYSE:PD) is one of the 10 oversold small-cap software stocks offering massive upside.
Despite undergoing some bearish sentiment, the stock has witnessed some eye-catching developments in recent weeks, which make it an attractive investment option within the small-cap software space. Back on March 12, PagerDuty Inc. (NYSE:PD) unveiled a significant enhancement of its artificial intelligence integration ecosystem. Over 30 AI partners have been added to the integration directory in 11 different categories. The PagerDuty Operations Cloud uses this platform to integrate with leading AI-native systems and enterprise-level software applications.
The ecosystem offers automatic triage capabilities and aids faster root cause analysis through observability data ingestion. The ecosystem further supports developers with coding by offering operational context within development tools during pre-commit risk scoring.
Chief Executive Officer Jennifer Tejada highlighted that the companies have been trying to integrate AI agents fast enough, but their interoperability in production is the difficult part. She further added that the ecosystem integrates over 30 AI partners directly into operational processes, ensuring faster incident response times. Partnerships include plugins for Claude Code from Anthropic and Cursor and integration with LangChain. These enable developers to detect hazardous code modifications and conduct investigations inside their code environment, which adds to PagerDuty’s preeminence in AI-first operations.
PagerDuty Inc. (NYSE:PD) is a provider of digital operations management solutions. It gathers digital signals and data from almost any device or software-enabled system. Through AI and ML, it processes, forecasts, and addresses problems using the collected data. It caters to several industries, including retail, hospitality, and more.
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