12 Best Software Infrastructure Stocks to Buy According to Hedge Funds

9. Okta Inc. (NASDAQ:OKTA)

Market Cap: $16.3 Billion

Number of Hedge Fund Holders: 55

Okta Inc. (NASDAQ:OKTA) is among the best software infrastructure stocks to buy according to hedge funds. While Cantor Fitzgerald analyst Jonathan Ruykhaver has been bullish on Okta since initiating coverage at the end of March 2025, he characterized the stock as a “contrarian value play” in his latest update early this week. He also reiterated his Overweight rating and $115 price target.

As his case for Okta Inc. (NASDAQ:OKTA) as a value play, Ruykhaver highlighted the stock’s steep valuation discount, with a price-to-FY 27 sales multiple of 4.4x, compared with peers’ average of 9.8x. He sees this discount as unwarranted, given the company’s strong execution, increased product breadth, and overall robust fundamentals. The analyst compared the bulls and bears cases to position the stock. For bulls, he argued:

Bulls point to Okta’s improving execution and the increasing strategic importance of identity as a control plane.” He added, “With identity now implicated in 80-90% of breaches, investors see Okta benefiting from the secular shift toward independent identity platforms and from NRR moving toward 110%+ over time.

For the bear case, he argued:

Bears focus on competitive dynamics and the risk that Okta’s expansion into adjacent identity categories may face strong pushback from incumbents like CyberArk, Microsoft, and SailPoint. Some view the ramp in Identity Governance and Privileged Access as promising but unproven at scale, with the products immature relative to best of breed.

However, the analyst noted that the rise of AI agents is making identity a more critical part of security, which supports his favorable view on the stock. He further argued:

We see identity becoming increasingly crucial to the security stack as AI agents proliferate. Early engagement from more than 100 customers across Okta for AI Agents and Auth0 for AI Agents supports the view that agent security could become a meaningful new TAM. Combined with improving execution, a strengthening product portfolio, and a discounted valuation, we see Okta as due for a re-rating as the growth story plays out.

Okta Inc. (NASDAQ:OKTA) is a cloud-based identity and access management company. It enables organizations to securely connect employees, customers, and partners to applications and systems.