On March 17, Orlando Bravo, Founder and Managing Partner of private equity firm Thoma Bravo, spoke with CNBC about the impact of artificial intelligence on the software sector. The conversation comes at a critical moment where software stocks have taken a beating lately, with the S&P Software and Services Index losing roughly a quarter of its value since October. This has left investors wondering what comes next. But Bravo’s take is more nuanced than the headlines suggest. Not all software companies are in the same boat. Some are genuinely being disrupted by AI, and their declining valuations are justified. However, others are strong businesses that are actually well-positioned to thrive in the AI era, and those have been unfairly punished by the broader selloff.
For Thoma Bravo, which has made over 500 software acquisitions over the past 25 years, the focus remains on company fundamentals such as cash flow, earnings, and customer contracts, rather than the market noise. Highlighting these measures, the firm’s management mentioned that many of their portfolio companies are performing well.
The message for investors is simple: in a volatile market, quality software companies with solid fundamentals and a clear AI strategy are the ones worth paying attention to. With that background, let’s explore our 11 Best Software Application Stocks to Buy Now.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed software application companies with market capitalizations above $2 billion. Also, we shortlisted only stocks with at least 50% upside potential according to TipRanks consensus as of the March 18 closing. In the final part of our search, we selected 11 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).
11. monday.com Ltd. (NASDAQ:MNDY)
monday.com Ltd. (NASDAQ:MNDY) is one of the 11 best software application stocks to buy now.
On March 11, monday.com Ltd. (NASDAQ:MNDY) unveiled new infrastructure that allows AI agents to register and function within the platform on behalf of people. The company revealed that they are now providing infrastructure that comprises both the infrastructure itself to enable AI agents from outside the platform to access the platform and work alongside its human users, as well as the onboarding of AI agents acting on behalf of humans.
The debut of monday.com’s dedicated path for AI agents to manage projects, update workflows, automate procedures, provide reports, and more was also announced. This is based on the Monday agent builder that is now in beta and the Monday sidekick that is currently in use.
Back on February 23, Jefferies downgraded monday.com Ltd. (NASDAQ:MNDY) from a Buy rating to Hold. The firm also reduced its price target significantly from $260 to $80, which now yields a single-digit upside of more than 6%.
The firm attributed such downward adjustment to a “hazy outlook” across the company’s small business and enterprise segments. It also highlighted the ongoing AI-related risks that have led to continued pressure on the broader applications software space.
monday.com Ltd. (NASDAQ:MNDY) is a software applications developer that operates a cloud-based visual Work Operating System. This platform contains modular building blocks that are used for creating software applications and scaling workflows for enterprises. It delivers customized work management tools for efficient management of processes and projects.
