Investor appetite for software businesses is fueled by diversification benefits, sustainable revenue, innovation, and growth prospects. In this rapidly evolving technological landscape, software companies are extending substantial resources to diversify their service offerings and achieve scalability.
However, the debate over AI’s significant impact on the software industry still seems to hog most of the limelight. On that front, Fidelity International, Australia, noted in a February 13 report that the situation is not as challenging for large, incumbent enterprises. In the report, they stated:
“AI is reshaping how software is built and used, but it does not erode the core moats of leading platforms: systems of record, workflow ownership, proprietary data, compliance, deep industry knowledge and trust. Companies such as SAP, Sage and RELX are embedding AI to enhance automation, insight and productivity, driving faster growth rather than disintermediation. High switching costs, regulatory demands and existing customer relationships further protect incumbents. As with past innovations, AI is expanding software’s total market, acting as an additive layer, not a replacement.”
Supporting the sector’s outlook, on February 3, business and technology insights company Gartner Inc. shared its 2026 outlook for global IT spending. The firm expects a double-digit year-on-year growth rate of 10.8% in technology spend, amounting to roughly $6.2 trillion for the year. The firm also shared a breakdown of capital allocation towards data center systems, devices, software, IT services, and communication services. Gartner’s VP Analyst John-David Lovelock stated:
“AI infrastructure growth remains rapid despite concerns about an AI bubble, with spending rising across AI‑related hardware and software. Demand from hyperscale cloud providers continues to drive investment in servers optimized for AI workloads.”
Given the above spending trends, one can expect impressive growth across the segment during 2026. With that background, let’s explore our 12 Oversold Software Stocks to Invest In.
Copyright: dizanna / 123RF Stock Photo
Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed software companies with market capitalizations above $2 billion. We then added a filter to shortlist companies with a Relative Strength Index (RSI) below 30. Next, we identified stocks with at least 60% upside potential based on TipRanks consensus as of the February 16 close. Finally, we selected 12 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. Adobe Incorporated (NASDAQ:ADBE)
Number of Hedge Fund Holders: 88
Upside Potential: 61.4%
Adobe Incorporated (NASDAQ:ADBE) is one of the 12 oversold software stocks to invest in.
On January 14, Robert Oliver of Baird reiterated his Neutral rating on Adobe Incorporated (NASDAQ:ADBE). In the process, he also lowered the price target from $410 to $350. Despite the downward revision, the stock still offers an upside potential of almost 33%.
On January 5, Brent Thill from Jefferies downgraded his rating for Adobe Incorporated (NASDAQ:ADBE) from Buy to Hold. He reduced his price target on the stock from $500 to $400, yielding a revised upside of more than 51%.
Thill’s rating adjustment came as part of Jefferies’ revisions to the software segment based on the 2026 outlook. The firm recommends investors remain underweight on the software segment, pointing towards moderating growth and better opportunities in other areas like semiconductors. It expects another year of gradual AI monetization, noting that stronger AI-related growth will be needed to ease concerns about potential disintermediation.
Adobe Incorporated (NASDAQ:ADBE) is a global technology company that focuses on digital media and marketing solutions. It offers tools for creating, publishing, and promoting content, as well as managing documents. It also operates a platform that allows businesses to measure and monetize customer experiences based on marketing, advertising, and analytics.
11. Descartes Systems Group (NASDAQ:DSGX)
Number of Hedge Fund Holders: 31
Upside Potential: 69.3%
Descartes Systems Group (NASDAQ:DSGX) is one of the 12 oversold software stocks to invest in.
On January 15, Morgan Stanley analyst Chris Quintero upgraded Descartes Systems Group (NASDAQ:DSGX) from an Equal Weight to an Overweight rating. The stock price target was also raised from $88 to $110, implying more than 67% upside.
Quintero expects organic growth acceleration to persist for Descartes Systems Group (NASDAQ:DSGX) during the coming year, as the company has moved past its “trough” shipping volumes. He also anticipates that the professional services refresh cycle will benefit the company, enabling market-share expansion.
On January 9, the price target on Descartes Systems Group (NASDAQ:DSGX) was lowered from $112 to $102 by Wolfe Research analyst Scott Group. The analyst reiterated his Outperform rating on the stock, which offers more than 55% upside.
Group noted the ISM manufacturing index, which remained below 50 for 36 of the previous 38 months, reflecting a prolonged, muted cycle in transportation. He also highlighted that LTL tonnage declined in 22 of the past 23 months. However, truckload spot rates significantly outpaced the typical seasonality in recent weeks.
Descartes Systems Group (NASDAQ:DSGX) is a logistics technology solutions company with a global outreach. It offers SaaS solutions for transportation management, e-commerce, and customs compliance by leveraging cloud-based capabilities. The company delivers a comprehensive suite of solutions such as routing, telematics, shipping, trade intelligence, and B2B connectivity services.
10. Salesforce Incorporated (NYSE:CRM)
Number of Hedge Fund Holders: 119
Upside Potential: 70.7%
Salesforce Incorporated (NYSE:CRM) is one of the 12 oversold software stocks to invest in.
On February 17, Gregg Moskowitz of Mizuho Securities maintained his Outperform rating on Salesforce Incorporated (NYSE:CRM). He lowered the price target from $340 to $280, which still yields close to 48% upside.
Moskowitz’s downward revision is part of Mizuho’s price target revisions across the enterprise software segment. The firm stated:
“Due to AI disruption fears, sentiment across software is nothing short of horrible at the moment.”
However, Mizuho Securities also noted that there are some unusually attractive opportunities in this segment for patient investors.
On February 3, TD Cowen highlighted a new agreement between Salesforce Incorporated (NYSE:CRM) and the U.S. Army, extending access to additional Department of Defense users. According to the firm, the move opens Salesforce’s flexible IDIQ contract to a wider set of defense organizations, which “expands the potential TAM significantly.”
TD Cowen also stated that the Army has seen strong interest from other DoD groups, suggesting Salesforce products could see wider use across military operations. The update comes amid ongoing competition among major software providers for high-value government contracts.
Salesforce Incorporated (NYSE:CRM) is a cloud-based customer relationship management provider that connects individuals and companies across the globe through AI-driven applications and tools. Through its unified platform, it facilitates sales management, marketing services, and analytics. Some of its platforms include Agentforce, Data Cloud, Tableau, and Slack.
9. Docusign Incorporated (NASDAQ:DOCU)
Number of Hedge Fund Holders: 60
Upside Potential: 74.7%
Docusign Incorporated (NASDAQ:DOCU) is one of the 12 oversold software stocks to invest in.
On February 13, Stephen Bersey from HSBC reiterated his Hold rating on Docusign Incorporated (NASDAQ:DOCU). In the process, the analyst lowered the target price from $77 to $53.
Bersey attributed his downward revision to meager growth prospects and a lower expected valuation multiple for the company. Following the adjustment, his estimate leads to a revised upside potential of more than 18% at the prevailing level.
On January 5, RBC Capital reaffirmed a Sector Perform rating on Docusign Incorporated (NASDAQ:DOCU). The firm reduced its price target for the stock from $95 to $70, which offers an upside of more than 56%.
RBC Capital anticipates AI-linked catalysts to become evident during 2026, which would benefit companies that have positioned themselves for AI adoption at an enterprise level. On the other hand, businesses that do not seem well prepared for such adoption will continue to struggle with AI-related threats.
DocuSign Inc (NASDAQ:DOCU) delivers electronic signature solutions across the globe, which has resulted in the transformation of agreement workflows. It has curtailed documentation processing time through digitization and automation. The company also offers contract lifecycle management services and AI-enabled analytics for its worldwide users.
8. Workiva Incorporated (NYSE:WK)
Number of Hedge Fund Holders: 30
Upside Potential: 76.1%
Workiva Incorporated (NYSE:WK) is one of the 12 oversold software stocks to invest in.
As of the February 16 closing, sentiment around Workiva Incorporated (NYSE:WK) remains highly bullish. The stock received Buy ratings from all 4 analysts covering it. It has a projected median 1-year price target of $109, implying 76% upside.
On February 9, Terry Tillman of Truist Securities reaffirmed his Buy rating on Workiva Incorporated (NYSE:WK). He set a $110 price target for the stock, implying almost 78% upside from the current level.
Tillman noted relatively better performance from Workiva Incorporated (NYSE:WK) compared with the median 21% drop across the software names it tracks. He highlighted the company’s “unique nature of markets served with tech, competitive & network effect moats.”
Tillman also shared optimism around the company’s growth prospects based on subscription and support revenues. As per his forecast, the company can register growth in the high-teens to above 20%, over a prolonged horizon.
Workiva Incorporated (NYSE:WK) is a technology company that offers a cloud-based SaaS platform for reporting solutions. The platform enables an integrated, audit-ready reporting system for ESG, financial, and GRC data. Its capabilities include data-linking, audit trail, administrator access management, data transformation, ERP solutions, and human capital management.
7. Workday Incorporated (NASDAQ:WDAY)
Number of Hedge Fund Holders: 64
Upside Potential: 81.1%
Workday Incorporated (NASDAQ:WDAY) is one of the 12 oversold software stocks to invest in.
On February 10, the price target on Workday Incorporated (NASDAQ:WDAY) was reduced from $285 to $230 by BTIG analyst Allan Verkhovski. He maintained a Buy rating on the stock, following the appointment of co-founder Aneel Bhusri as CEO, replacing Carl Eschenbach.
Verkhovski highlighted that Workday’s accelerated AI strategy could require increased investments and viewed the leadership transition favorably. He remains confident in Bhusri’s ability to guide the company through the evolving AI landscape.
On February 9, Oppenheimer analyst Brian Schwartz also maintained an Outperform rating on Workday Incorporated (NASDAQ:WDAY), following Carl Eschenbach’s departure as the CEO, with Aneel Bhusri stepping in as his successor. The analyst views Bhusri as well-positioned to guide the company through the software industry’s transition towards AI technologies.
He believes that the timing of this announcement is critical given the company’s relative underperformance in revenue and stock growth, along with the AI product narrative. Schwartz also cautioned that such transitions inherently introduce uncertainty and possible strategic shifts.
Workday Incorporated (NASDAQ:WDAY) delivers enterprise cloud applications for financial management, human capital management, and data analytics. Its financial management capabilities include financial processing, consolidation, internal control, audits, and analytics. The company facilitates end-to-end human capital management functions that include hiring, onboarding, training, and payments for employees.
6. Freshworks Incorporated (NASDAQ:FRSH)
Number of Hedge Fund Holders: 41
Upside Potential: 87.9%
Freshworks Incorporated (NASDAQ:FRSH) is one of the 12 oversold software stocks to invest in.
On February 11, Citizens analyst Patrick Walravens maintained an Outperform rating on Freshworks Incorporated (NASDAQ:FRSH). The analyst reduced his price target on the stock from $27 to $16, which still implies 121% upside.
Walravens pointed towards the company’s stronger-than-anticipated fourth-quarter results and revenue forecast, showcasing his confidence in the company’s underlying momentum.
On February 11, the price target for Freshworks Incorporated (NASDAQ:FRSH) was lowered from $12 to $10 by Piper Sandler analyst Billy Fitzsimmons. He maintained a Neutral rating on the stock after the quarterly results were released.
Fitzsimmons reflected on the management’s mixed guidance for 2026, with revenue and billings outlook coming in ahead of consensus estimates. However, projections for operating margin and EPS were below expectations. His revised estimate results in an upside potential of more than 38% at the prevailing level.
Freshworks Incorporated (NASDAQ:FRSH) is a software developer that offers cloud-based SaaS solutions across the globe. With a focus on user-friendly AI-enabled solutions for customers, they deliver IT service management, customer experience, and sales & marketing. They cater to diverse organizational clients ranging from early-stage companies to large enterprises.
5. Intuit Incorporated (NASDAQ:INTU)
Number of Hedge Fund Holders: 96
Upside Potential: 95.8%
Intuit Incorporated (NASDAQ:INTU) is one of the 12 oversold software stocks to invest in.
On February 2, Intuit Incorporated (NASDAQ:INTU) revealed a long-term partnership with Affirm (AFRM), which will make Affirm an exclusive pay-over-time solution, built directly into the QuickBooks Payments system. This feature will enable eligible businesses across the U.S. to offer flexible payment plans to customers.
David Hahn, EVP, GM Services Group, stated:
“By partnering with Affirm to bring native, pay-over-time functionality to QuickBooks, we are giving businesses a powerful new way to increase conversion and improve cash flow, while offering their own customers flexibility, with more than $2 trillion in invoices managed on our platform each year, this integration further accelerates the frictionless payments capabilities we offer to our customers to manage and grow their business all-in-one place, and represents one of the many ways we are helping to fuel financial success for businesses and consumers across our Intuit platform.”
On January 6, Truist Financial initiated coverage of Intuit Incorporated (NASDAQ:INTU) with a Buy rating and a $739 price target. The firm highlighted the company’s strong market position and diversified portfolio of brands such as TurboTax, Credit Karma, QuickBooks, and Mailchimp. It noted the company’s increasing focus on recurring revenues and margin expansion through a cloud-based subscription model and fintech services.
Intuit Incorporated (NASDAQ:INTU) is a financial technology platform that offers financial management, compliance, payments, tax, and personal finance solutions. The company serves individuals and small businesses through unified AI-enabled platforms. Through its QuickBooks services, it delivers checking accounts, payroll solutions, time tracking, merchant payment processing, and bill pay solutions. It also offers marketing automation and CRM services through Mailchimp.
4. Unity Software (NYSE:U)
Number of Hedge Fund Holders: 74
Upside Potential: 100.9%
Unity Software (NYSE:U) is one of the 12 oversold software stocks to invest in.
On February 12, Wells Fargo analyst Alec Brondolo maintained his Overweight rating on Unity Software (NYSE:U), while reducing the price target from $54 to $38. The adjustment still results in an upside potential of more than 103%.
Brondolo noted that the recent financial results were dragged down by weak performance in the company’s Ironsource division and seasonality in the Create business that was higher than previously anticipated. However, these factors do not overshadow the analyst’s optimism amid runtime data that is expected to boost its Ad Network market share.
On February 12, Goldman Sachs analyst Eric Sheridan reiterated his Neutral rating on Unity Software (NYSE:U). The analyst also lowered the price target from $47 to $27, implying more than 44% upside.
Sheridan reflected on the company’s fourth-quarter results, which exceeded revenue and adjusted EBITDA estimates. However, the first-quarter guidance fell below prior expectations, pointing to short-term hurdles. Despite the near-term challenges, management is strategizing revenue and margin growth for game creation, distribution, and in-game monetization. The company is also looking to tap into opportunities within the China-based ecosystem.
Unity Software (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.
3. Atlassian Corporation (NASDAQ:TEAM)
Number of Hedge Fund Holders: 60
Upside Potential: 100.9%
Atlassian Corporation (NASDAQ:TEAM) is one of the 12 oversold software stocks to invest in.
On February 6, Wells Fargo analyst Ryan MacWilliams reaffirmed an Overweight rating for Atlassian Corporation (NASDAQ:TEAM). He lowered the price target on the stock from $216 to $155, leading to an adjusted upside potential of nearly 84%.
Despite lower valuations, SaaS companies continue to remain under pressure due to skeptical investors. Atlassian’s results for the recent quarter were solid, although the analyst did note a minor second-quarter cloud revenue beat and a soft Q3 cloud guidance.
On February 6, Ittai Kidron from Oppenheimer lowered the price target on Atlassian Corporation (NASDAQ:TEAM) from $275 to $150. The analyst maintained an Outperform rating on the stock, which still offers close to 78% upside following the downward revision.
Kidron appreciated the company’s second-quarter results, which exceeded expectations across all metrics and supported its long-term growth targets. While near-term challenges persist, the analyst views the current valuation as attractive over the long term.
Atlassian Corporation (NASDAQ:TEAM) delivers collaboration, project management, and IT service tools that help enterprises in integrating their teams through a subscription-based model. Some of its offerings include Jira, Confluence, Trello, and Loom. The company covers a broad set of solutions such as project management, document sharing, video communication tools, service management, and Chat & Agent capabilities.
2. Guidewire Software (NYSE:GWRE)
Number of Hedge Fund Holders: 72
Upside Potential: 112.6%
Guidewire Software (NYSE:GWRE) is one of the 12 oversold software stocks to invest in.
As of February 16 closing, Guidewire Software (NYSE:GWRE) carried a highly bullish sentiment. Of the 12 analysts covering the stock, 10 assigned Buy ratings and 2 issued Hold ratings. With no Sell rating, the stock has a projected median 1-year price target of $270.10, implying an impressive upside of more than 112%.
On January 9, Guidewire Software (NYSE:GWRE) reported a successful completion of its share buyback program, which had been approved back in September 2022. Moreover, the company made a subsequent announcement that, following this completion, the board of directors issued an approval for a new buyback program, which will be effective immediately. This gives the company the authorization to repurchase up to an additional $500 million worth of its outstanding shares of common stock.
Guidewire Software (NYSE:GWRE) offers a cloud-based platform for property and casualty (P&C) insurers worldwide. Through the platform, it provides several applications, such as PolicyCenter, ClaimCenter, and BillingCenter, that facilitate core operations for P&C insurance companies. Other offerings include Guidewire Rating Management, Guidewire InsuranceNow, Guidewire Reinsurance Management, Guidewire Client Data Management, and more.
1. ServiceTitan Incorporated (NASDAQ:TTAN)
Number of Hedge Fund Holders: 48
Upside Potential: 113.7%
ServiceTitan Incorporated (NASDAQ:TTAN) is one of the 12 oversold software stocks to invest in.
On January 20, Josh Baer from Morgan Stanley upgraded his rating on ServiceTitan Incorporated (NASDAQ:TTAN) from Equal Weight to Overweight. The analyst also raised the price target from $125 to $131, leading to a revised upside potential of 109%.
According to Baer, prior areas of caution, including valuation and growth execution, have now improved meaningfully. He pointed towards a stronger conviction in the company’s underlying performance and strategy. Therefore, the stock is now Morgan Stanley’s new top pick in the sector, replacing Toast (TOST).
On January 13, Goldman Sachs analyst Adam Hotchkiss initiated coverage on ServiceTitan Incorporated (NASDAQ:TTAN) with a Neutral rating. The analyst estimated a $117 price target, noting the company’s leading presence in the under-digitized trades market, which drives a large expansion opportunity. He cautioned that the stock’s current valuation limits immediate upside despite an attractive long-term margin and growth outlook.
ServiceTitan Incorporated (NASDAQ:TTAN) operates cloud-based software platforms that integrate various business functions, such as advertising, contracting, invoicing, payment processing, reporting, recruitment, and others. It facilitates these functions through ServiceTitan, FieldRoutes, Aspire, and Convex platforms. The company also engages with heating, ventilation, and air conditioning (HVAC) businesses for plumbing, irrigation, water treatment, painting, pest control, roofing, and other relevant solutions.
While we acknowledge the potential of TTAN as an investment, 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 TTAN and that has 100x upside potential, check out our report about this cheapest AI stock.
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