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.
10. Unity Software Inc. (NYSE:U)
Unity Software Inc. (NYSE:U) is one of the 11 best software application stocks to buy now.
On March 3, Omar Dessouky of Bank of America Securities upgraded Unity Software Inc. (NYSE:U) from Underperform to Neutral. The analyst also increased his target price on the stock from $18 to $19.
Dessouky noted weaker-than-expected first-quarter guidance, which has reduced investor expectations for 2026 and also lowered the risk of further estimated cuts. He added that near-term catalysts appear balanced, with the focus now shifting towards the second-quarter guidance. Any form of potential strength could act as a signal towards possible acceleration in the company’s Grow segment.
Back on February 12, Needham reduced its price target for Unity Software Inc. (NYSE:U) from $50 to $35, leading to an adjusted upside potential of more than 74% despite the revision. The firm reaffirmed its Buy rating on the stock following the fourth-quarter results.
Vector showed double-digit sequential growth, with momentum expected to continue in FY26, making the firm optimistic about Unity’s execution. According to the firm, Vector would probably cover the present enterprise value using the sum-of-parts methodology, and this is the main justification for owning the shares.
Unity Software Inc. (NYSE:U) offers tools for developing interactive real-time 2D and 3D content for mobile phones, personal computers, consoles, and extended reality devices. The company helps developers across the overall development lifecycle through its AI-enabled platform. Other offerings include Create Solutions and Grow Solutions for user engagement and monetization of content.
9. Klaviyo Inc. (NYSE:KVYO)
Klaviyo Inc. (NYSE:KVYO) is one of the 11 best software application stocks to buy now.
On February 24, Klaviyo Inc. (NYSE:KVYO) announced forming a strategic alliance with Alphabet Inc. (GOOG). This partnership aims to assist various organizations in creating autonomous AI experiences throughout the entire customer journey. This would involve discovery, purchase, service, loyalty, and more.
The purpose is to assist various marketers in moving beyond traditional static experiences and into the world of autonomous experiences. The alliance will leverage Google’s search, advertising, AI, and messaging expertise, as well as Klaviyo’s real-time consumer data processing and action capabilities.
On February 11, Needham analyst Scott Berg reduced the firm’s price target on Klaviyo Inc. (NYSE:KVYO) from $45 to $30. The analyst maintained his Buy rating on the stock, which still yields an impressive upside potential of almost 57% at the prevailing level.
Berg noted that Klaviyo Inc. (NYSE:KVYO) delivered strong fourth-quarter results, registering revenue outperformance. This was driven primarily by solid sales and customer expansion during the holiday season.
Klaviyo Inc. (NYSE:KVYO) delivers an AI-first SaaS platform for B2C clients that helps in their customer relationship management functions. The platform enables data storage, campaigns, marketing automation, and analytics. It also allows for customer service integration and omni-channel marketing tools such as emails, SMS, and WhatsApp marketing.
8. Commvault Systems Inc. (NASDAQ:CVLT)
Commvault Systems Inc. (NASDAQ:CVLT) is one of the 11 best software application stocks to buy now.
On March 17, Rudy Kessinger from DA Davidson reduced the firm’s price target on Commvault Systems Inc. (NASDAQ:CVLT) to $125 from $135. The analyst maintained his Buy rating on the shares, which offer a revised upside of more than 56% despite the revision.
As per the analyst, the search for a CFO is ongoing, with candidates having experience in public software companies. Discussions with the investor relations team at Commvault indicated that the addition of a well-recognized CFO could prove to be a major catalyst.
Kessinger also noted that the company is trying to regain investor confidence to restart its beat-and-raise strategy. He highlighted that the initial FY27 could be soft, and the annual recurring revenue projections for the fourth quarter do not seem conservative.
Earlier on February 25, Dan Bergstrom from RBC Capital reiterated his Sector Perform rating on Commvault Systems Inc. (NASDAQ:CVLT). He reflected on the company’s impressive growth in free cash flows, as well as management’s guidance of further 10% expansion by mid-2026.
Commvault Systems Inc. (NASDAQ:CVLT) is a cybersecurity and data protection company that delivers data recovery and protection services. Through its Operational Recovery function, it offers data backup, recovery, and workload mobility solutions covering on-premises, hybrid, and multiple cloud environments.
7. Life360 Inc. (NASDAQ:LIF)
Life360 Inc. (NASDAQ:LIF) is one of the 11 best software application stocks to buy now.
On March 3, Citi analyst Siraj Ahmed reduced the firm’s price target on Life360 Inc. (NASDAQ:LIF) from $82.25 to $68.75. The analyst maintained his Buy rating on the shares, which still offer more than 65% upside at the current level.
Ahmed noted that the first-quarter guidance pointed to monthly active user growth below 20%, raising concerns about slowing user growth, though it views this metric as more controllable than the market expects. He still forecasts around 20% year-over-year MAU growth but said the target cut reflects lower peer multiples, increased competition, and a more cautious medium-term growth outlook.
On March 3, UBS also reduced the firm’s price target on Life360 Inc. (NASDAQ:LIF) from $110 to $75. The firm maintained its Buy rating on the stock, which currently yields more than 80% upside potential.
According to the firm, Life360 has released FY26 guidance that slightly beats street estimates on revenue and adjusted EBITDA. This was essentially driven by better-than-expected growth in ad revenue since the acquisition of Nativo.
The company expects the first half of 2026 to be investment and integration-heavy, with revenue acceleration and margin expansion anticipated during the second half. Execution on ad monetization, international MAU growth, and second-half operating leverage are critical to achieving the company’s long-term framework of scaling high-margin recurring revenue.
Life360 Inc. (NASDAQ:LIF) offers a technology platform that facilitates communication, digital security, location sharing, and emergency assistance. The company provides a mobile-first technology platform that emphasizes security and data protection for members. Some of the features include real-time coordination, smart notifications, and driving alerts.
6. SoundHound AI Inc. (NASDAQ:SOUN)
SoundHound AI Inc. (NASDAQ:SOUN) is one of the 11 best software application stocks to buy now.
On February 27, Piper Sandler analyst James Fish reduced the firm’s price target on SoundHound AI Inc. (NASDAQ:SOUN) from $11 to $9. The analyst maintained a Neutral rating on the shares, which now yield an upside of more than 15%.
Fish described the quarter as mixed, with revenue figures staying in line with consensus forecasts, a profitability miss, and stronger-than-anticipated guidance. However, he flagged concerns about the business’s current run-rate trajectory and its heavy reliance on M&A and go-gets to narrow the existing gap.
On February 26, SoundHound AI Inc. (NASDAQ:SOUN) announced its fourth quarter results. Revenue was recorded at $55.1 million, exhibiting a 59% year-over-year growth. Topline figures for the entire year doubled on a yearly basis, standing at $169 million.
During the quarter, the company closed more than 100 customer deals. These included engagements with an automotive OEM from Japan, a telecommunications company based in the U.S., and an athletic brand with global presence.
SoundHound AI Inc. (NASDAQ:SOUN) offers voice AI services to businesses, enabling them to communicate effectively with customers. It covers various industries worldwide, including automotive, media, and technology. Its proprietary platform, Houndify, provides a range of tools that enable businesses to build voice assistants, customer support, and other capabilities.
While we acknowledge the potential of SOUN 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 SOUN and that has 100x upside potential, check out our report about the cheapest AI stock.
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