In this article, we will take a look at the most profitable software stocks to buy now.
In this era of global technology transformation, software companies have had their fair share of traction, and rightly so! However, these companies have recently been in the spotlight amid a potential “doomsday” scenario. On a recent CNBC interview, Tom Lee, Chairman of Bitmine Immersion and Co-Founder & Head of Research at Fundstrat, warned that AI is adversely impacting the $450 billion software sector. Software companies, which once “ate the world,” are now increasingly exposed to AI-driven disruption risks, he noted.
While the software sector remains under pressure, recent research still indicates healthy underlying growth. On January 23, Globe Newswire cited a report by Research and Markets, titled “Business Software – Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2026-2031).” According to this report, the global business software market is well-positioned for significant growth, with the market size projected to reach USD 737.3 billion by 2026. This level is significantly higher than USD 660 billion in 2025, with analysts expecting it to climb to USD 1.28 trillion by 2031. Thus, this growth translates to a solid CAGR of 11.71% between 2026 and 2031.
The report cites reasons for this growth, noting that enterprises are accelerating the adoption of “AI-enabled workflow automation, cloud-native deployment, and data-centric architectures that embed analytics directly into operational processes.” In addition, growth will be supported by the increasing demand for ESG reporting, the building of resilient regional supply chains, and the adoption of low-code development platforms. While today may seem difficult for the software space, the path ahead could unfold very differently.
Against this backdrop, we have compiled a list of the 13 most profitable software stocks to buy now.
Copyright: dizanna / 123RF Stock Photo
Our Methodology
To compile our list of the 13 most profitable software stocks to buy now, we used the Stock Analysis screener to filter for software stocks with market capitalizations exceeding $2 billion that reported operating and net profit margins over 20%. Next, we shortlisted stocks with an upside potential of at least 5%. From this pool, we selected the top 13 stocks with the highest trailing twelve-month (TTM) net income. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q3 2025.
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).
13. F5, Inc. (NASDAQ:FFIV)
Net Income (TTM): $705.99 million
Number of Hedge Fund holdings: 40
On January 28, Matthew Hedberg of RBC Capital Markets raised the price target on F5, Inc. (NASDAQ:FFIV) to $345 from $325 and maintained an Outperform rating. This follows the company’s strong beat-and-raise quarter, with the October 2025 security incident having a limited impact on results. That said, the firm noted that the company’s raised FY26 guidance now reflects “essentially no conservatism for the incident.”
On the same day, Evercore ISI reiterated its In Line rating and a price target of $320 on F5, Inc. (NASDAQ:FFIV), which matches the consensus estimate, suggesting an upside potential of 16.02%. Similarly, Piper Sandler raised the price target on the company to $325 from $295 and kept an Overweight rating on January 28.
The firm pointed out that F5, Inc. (NASDAQ:FFIV) is expanding its core offerings to include hybrid multi-cloud, AI advancement, and delivery/security convergence. Piper Sandler advises owning the stock, citing “Year of Refresh, F5’s own refresh/EoSS, estimates de-risked, software acceleration coming” among its rationale for the bullish guidance.
F5, Inc. (NASDAQ:FFIV) is a Washington-based provider of multicloud application security and delivery solutions. Founded in 1996, the company offers distributed cloud services, multi-cloud networking, domain name system, and content delivery network.
12. PTC Inc. (NASDAQ:PTC)
Net Income (TTM): $818.28 million
Number of Hedge Fund holdings: 51
On February 9, TheFly reported that BofA reduced its price target on PTC Inc. (NASDAQ:PTC) to $172, down from $190, and reiterated a Neutral rating. The company’s macroeconomic backdrop remains challenging but shows no further deterioration, the firm noted. That said, it lowered its annual sales outlook following the earnings report.
Earlier, on February 6, BMO Capital reduced its price target on PTC Inc. (NASDAQ:PTC) to $189 from $219 and maintained an Outperform rating post financial results. The company’s quarterly performance is what the firm called “okay,” noting that commentary on contracted deferred Annual Recurring Revenue (ARR) offers some reassurance about the usual back-half growth ramp.
BMO Capital remains optimistic about the company’s strategy, saying that PTC Inc. (NASDAQ:PTC)’s focus on advancing CAD, data management, and life-cycle solutions for manufacturers offers long-lasting opportunities. The company’s stable growth outlook and share repurchase plans are the basis of the firm’s bullish stance.
PTC Inc. (NASDAQ:PTC) is a Massachusetts-based software company that offers products including Windchill, ThingWorx, ServiceMax, and Arena. Incorporated in 1985, the company also offers solutions, such as Kepware, Kepware Edge, and KEPServerEX.
11. VeriSign, Inc. (NASDAQ:VRSN)
Net Income (TTM): $825.7 million
Number of Hedge Fund holdings: 44
On February 9, Citi trimmed the price target on VeriSign, Inc. (NASDAQ:VRSN) to $280 from $337 and maintained a Buy rating, TheFly reported. According to the firm, the post-earnings pullback offers an appealing entry point, with the company’s fundamentals remaining solid amid accelerating domain growth driven by AI tailwinds.
Earlier, on February 5, VeriSign, Inc. (NASDAQ:VRSN) reported its Q4 2025 earnings, delivering revenue above consensus and missing EPS guidance. The company posted EPS of $2.23 and revenue of $425.3 million, compared with forecasts of $2.35 and $424.05 million, respectively. The EPS miss is primarily due to increased operating expenses or strategic investments.
“We are constantly doing R&D. We are constantly improving our own infrastructure,” stated CEO Jim Bidzos. “AI is undoubtedly a huge part of that, and I think it’s probably safe to say that it’s gonna continue to grow for well into the foreseeable future,” he added.
Looking ahead, VeriSign, Inc. (NASDAQ:VRSN) anticipates revenue in the range from $1.715 billion to $1.735 billion and operating income between $1.16 billion and $1.18 billion. The capital expenditure guidance is expected to fall between $55 million and $65 million.
VeriSign, Inc. (NASDAQ:VRSN) is a Virginia-based provider of internet infrastructure and domain name registry services. Founded in 1995, the company facilitates internet navigation for several recognized domain names worldwide.
10. Cadence Design Systems, Inc. (NASDAQ:CDNS)
Net Income (TTM): $1.06 billion
Number of Hedge Fund holdings: 69
On February 10, Vivek Arya, an analyst at Bank of America Securities, reaffirmed a Buy rating on Cadence Design Systems, Inc. (NASDAQ:CDNS), while setting a price target of $400. This translates to an upside potential of approximately 34%.
On the same day, Reuters reported that Cadence Design Systems, Inc. (NASDAQ:CDNS) launched a virtual artificial intelligence “agent” to assist giants simplify the process of designing computer chips. The unveiled technology aims to provide up to 10 times productivity enhancements for coding designs and testbenches, creation of test plans, and automation of issue resolution.
According to Cadence Design Systems, Inc. (NASDAQ:CDNS), the product is the “world’s first agentic workflow for automating chip design and verification,” with the system not only orchestrating multiple virtual engineers, but also employing the company’s core electronic design automation (EDA) tools. What’s interesting is that many leading semiconductor companies are already utilizing the advanced technology. As senior director of engineering at Altera, Arvind Vidyarthi says that the system “significantly reduced our verification effort in some areas by approximately 10X.”
Cadence Design Systems, Inc. (NASDAQ:CDNS) is a California-based provider of software, hardware, and other services. The company’s core offerings include functional verification services, a formal verification platform, a parallel logic simulation platform, an enterprise emulation platform, and a prototyping platform for chip verification.
9. Corpay, Inc. (NYSE:CPAY)
Net Income (TTM): $1.07 billion
Number of Hedge Fund holdings: 45
According to TheFly, UBS lifted the price target on Corpay, Inc. (NYSE:CPAY) to $380, up from $315, and maintained a Neutral rating on the stock on February 10. This upward revision comes after the fourth-quarter report.
Corpay, Inc. (NYSE:CPAY) now projects 10% organic revenue growth, which matches the preliminary outlook provided during Q3 earnings. Additionally, the company forecasts a 22% adjusted EPS growth at the midpoint, backed by stable-to-strong trends and a relatively healthy macroeconomic environment.
UBS acknowledged the company’s sustained progress in its strategic rotation toward Corporate Payments, which it believes is a growth driver in itself, and added that the Alpha Group and AvidXChange acquisitions are projected to contribute $1.00 in cash EPS accretion.
Several other analysts have also revised their outlook for Corpay, Inc. (NYSE:CPAY). On February 6, Dan Dolev, an analyst at Mizuho, increased the price target on the company to $340 from $320 and reiterated a Neutral rating. A day earlier, BofA raised its price target on CPAY to $384 from $342, maintaining a Buy rating. This follows the Q4 earnings beat and 2026 outlook surpassing Street estimates.
Corpay, Inc. (NYSE:CPAY) is a Georgia-based payments company that facilitates management of vehicle-related expenses, lodging expenses, and corporate payments. Founded in 1986, the company also offers prepaid food and transportation vouchers and cards.
8. Paychex, Inc. (NASDAQ:PAYX)
Net Income (TTM): $1.6 billion
Number of Hedge Fund holdings: 53
As of February 12, Paychex, Inc. (NASDAQ:PAYX) is trading at one of its lowest levels over the past year, at $92.47. This is slightly higher than the 52-week low of $91.70.
Earlier, on January 27, Cantor Fitzgerald started coverage on Paychex, Inc. (NASDAQ:PAYX) with an Underweight rating and a price target of $98. As the lowest 1-year price target, the firm’s guidance translates to an upside potential of 3.33%. According to the firm, intensifying competition in the small and medium-sized business (SMB) space, alongside broader macroeconomic challenges, is adversely affecting the company’s ability to drive organic top-line growth.
Although Cantor Fitzgerald accepted that the recent acquisition of Paycor will improve Paychex, Inc. (NASDAQ:PAYX)’s up-market capabilities, a move it described as “largely defensive,” the firm noted that the company’s long-term organic growth picture remains blurry. With a record of robust free cash flow generation and shareholder-friendly cash returns, the company is expected to sustain its momentum, Cantor Fitzgerald asserted.
Paychex, Inc. (NASDAQ:PAYX) is a New York-based provider of human capital management solutions (HCM). Founded in 1971, the company offers payroll processing, employee payment, and retirement solutions, among other services.
7. Palantir Technologies Inc. (NASDAQ:PLTR)
Net Income (TTM): $1.63 billion
Number of Hedge Fund holdings: 81
On February 10, Palantir Technologies Inc. (NASDAQ:PLTR) announced the extension of its multi-year agreement with Airbus to continue strengthening Skywise, a civil aviation data platform. While improving designs and efficiency of aircraft and equipment, the platform also enhances the performance of airlines’ operations through a blend of in-flight engineering and operational data.
This announcement comes at a time when the aerospace sector faces growing demands for innovation and competitiveness, thus allowing Palantir Technologies Inc. (NASDAQ:PLTR) to provide Airbus with continued access to advanced technology. As expressed by Josh Harris, the Executive Vice-President of the company,
“The multi-year extension is a testament to the bold vision we share with Airbus—to reimagine the role of technology in civil aviation. Together, we will continue to deliver secure, AI-enabled capabilities with multiple LLMs that improve operational performance from manufacturing and supply chain to maintenance and flight operations.”
On the same day, TheFly reported that Daiwa upgraded Palantir Technologies Inc. (NASDAQ:PLTR) to Buy from Neutral and reduced the price target from $200 to $180. The firm noted that the company’s revenue increased 70% YoY in Q4 and operating income surged roughly 2.1-fold. According to the analyst, the company’s sharp growth will “persist and accelerate.”
Palantir Technologies Inc. (NASDAQ:PLTR) is a Colorado-based software platform provider for the intelligence community to support counterterrorism investigations and operations. With a presence across many countries, the company provides Palantir Gotham, Palantir Foundry, Palantir Apollo, and Palantir Artificial Intelligence Platform.
6. Fortinet, Inc. (NASDAQ:FTNT)
Net Income (TTM): $1.85 billion
Number of Hedge Fund holdings: 44
On February 9, Fatima Boolani, an analyst at Citi, lifted the price target on Fortinet, Inc. (NASDAQ:FTNT) to $90 from $85 and maintained a Neutral rating, according to TheFly. In line with the consensus estimate, the firm’s guidance implies a 6.81% upside.
On the same day, BMO Capital also raised the price target on Fortinet, Inc. (NASDAQ:FTNT) to $95, up from $90, and reiterated a Market Perform rating. BMO highlighted the company’s fourth-quarter earnings, noting results that outperformed expectations across key metrics. What’s even more interesting is that management’s FY26 billings growth projection of 13% YoY exceeded the street forecast of 11%, BMO noted.
The firm’s cautious stance is driven by disappointing service growth, with higher service revenue growth required to support a bullish outlook. Looking ahead, the firm expects potential upside to topline estimates, while anticipating Fortinet, Inc. (NASDAQ:FTNT) to gain even more traction in the Secure Access Service Edge (SASE) space.
Fortinet, Inc. (NASDAQ:FTNT) is a California-based provider of cybersecurity and various networking and security solutions. Founded in 2000, the company offers its products to enterprises, communication service operators, and government institutions.
5. Joint Stock Company Kaspi.kz (NASDAQ:KSPI)
Net Income (TTM): $2.01 billion
Number of Hedge Fund holdings: 40
Earlier on February 2, Susquehanna reduced the price target on Joint Stock Company Kaspi.kz (NASDAQ:KSPI) to $87 from $130 and downgraded it from Positive to Neutral, according to TheFly. This translates to nearly 17% upside. On the other hand, Citi remains positive on the stock, having reaffirmed a Buy rating and set a $100 price target on January 15.
When Joint Stock Company Kaspi.kz (NASDAQ:KSPI) last reported its third-quarter earnings on November 10, it highlighted the commitment to balance investments in the company and returning cash to shareholders in 2026. That said, management described 2025 as the “investment year,” laying the foundation for future growth.
Overall, Joint Stock Company Kaspi.kz (NASDAQ:KSPI) has mixed market sentiment, with 43% of analysts bullish, 43% neutral, and 14% bearish. With a median 1-year price target of $89.63, the stock offers 20.36% upside.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) will disclose its financial report on March 2, 2026, for the quarter and year ending December 31, 2025.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI), headquartered in Almaty, the Republic of Kazakhstan, is a provider of payments, marketplace, and fintech solutions for both consumers and merchants. Founded in 2008, the company is engaged in banking, real estate, and payment processing, among other activities.
4. Intuit Inc. (NASDAQ:INTU)
Net Income (TTM): $4.12 billion
Number of Hedge Fund holdings: 96
On February 11, Intuit Inc. (NASDAQ:INTU) announced the launch of a construction edition for its Enterprise Suite, an AI-driven enterprise resource planning (ERP) solution for the mid-market construction space.
While integrating project, financial, and operational workflows, the new edition is aimed at the $2 trillion construction industry. From budget tracking and cost group planning to project management tools and AIA-style invoicing capabilities, the solution offers a range of features. As stated by Ashley Still, Executive Vice President and General Manager of mid-market at Intuit Inc. (NASDAQ:INTU),
“Construction businesses are naturally complex, with dozens of projects to track and ensure their profitability, rising material costs to monitor, and limited visibility into overall business and multi-entity performance.”
A day prior to this update, BMO Capital significantly reduced the price target on Intuit Inc. (NASDAQ:INTU) to $624 from $810 and maintained an Outperform rating. According to the firm, the online segment excluding “Live” features seemed “a little shakier,” which it believes is a known risk.
Intuit Inc. (NASDAQ:INTU) is a California-based company that offers products and services, including financial management, payments and capital, and marketing solutions. Founded in 1983, the company operates in four segments: Global Business Solutions, Consumer, Credit Karma, and ProTax.
3. Adobe Inc. (NASDAQ:ADBE)
Net Income (TTM): $7.13 billion
Number of Hedge Fund holdings: 88
On February 11, Adobe Inc. (NASDAQ:ADBE) reached a new low of $257.64 over the past six months. This level is modestly higher than its 52-week low of 251.10.
Recently, many analysts have revised their outlook on Adobe Inc. (NASDAQ:ADBE). On February 3, TheFly reported that Piper Sandler downgraded the company’s stock to Neutral from Overweight. Again, on January 26, UBS trimmed its price target on the company to $340, down from $375, and reiterated a Neutral rating. Despite the cut, the price target implies approximately 31% upside.
Previously, on January 12, Goldman Sachs downgraded Adobe Inc. (NASDAQ:ADBE) to Sell from Buy and set a price target of $290. According to the investment bank, the company’s NTM revenue growth of 10% and EPS growth of 10% are lower than those of its competitors by 1% and 8%, respectively. The bank believes EPS growth could be under greater strain due to ongoing investments in AI initiatives.
Adobe Inc. (NASDAQ:ADBE) is a California-based technology company operating through Digital Media, Digital Experience, and Publishing and Advertising segments.
2. Oracle Corporation (NYSE:ORCL)
Net Income (TTM): $15.43 billion
Number of Hedge Fund holdings: 122
On February 11, Oracle Corporation (NYSE:ORCL) announced that the Centers for Medicare & Medicaid Services (CMS) has chosen the company’s Oracle Cloud Infrastructure (OCI) to help consolidate and migrate selected on-premises workloads to the cloud. This supports the federal health agency’s modernization initiative. That said, the company will provide infrastructure for CMS mission-critical systems using its FedRAMP High-authorized environment.
As stated by Kim Lynch, Executive Vice President of Government, Intelligence, and Defense at Oracle Corporation (NYSE:ORCL),
“CMS’ programs are vital to the wellbeing of many Americans, a responsibility that demands uncompromising security, reliability, and fiscal stewardship.”
Previously, on February 9, Melius Research downgraded Oracle Corporation (NYSE:ORCL) to Hold from Buy and maintained a $160 price target, which is slightly above the stock’s current price. Amid intensifying AI competition in the enterprise software market, Melius highlighted that the company “doesn’t generate cash and there is no guarantee that OpenAI beats Anthropic and Google.”
Oracle Corporation (NYSE:ORCL) is a Texas-based company that provides solutions for enterprise information technology environments. Incorporated in 1977, the company offers Oracle Cloud SaaS, Oracle Health applications, Oracle Cloud and on-premises licenses, and Oracle license support services.
1. Microsoft Corporation (NASDAQ:MSFT)
Net Income (TTM): $119.26 billion
Number of Hedge Fund holdings: 312
As of February 13, Microsoft Corporation (NASDAQ:MSFT) is a consensus buy with 92% of analysts covering the stock rating it Buy, and the remaining 8% neutral. While the median price target of $600 reflects an upside potential of 49.51%, the highest and lowest price targets translate to an upside potential of 81.90% and a downside potential of 2.32%.
Earlier on February 9, Melius Research downgraded Microsoft Corporation (NASDAQ:MSFT) to Hold from Buy and trimmed the price target to $430. The firm raises concerns about the company’s ability to remain competitive in AI without substantially increasing capex, adding that these investments are required to compete with rivals.
According to the analyst, Microsoft Corporation (NASDAQ:MSFT) could face execution and earnings management challenges if it doesn’t increase spending. Indeed, this would harm the company’s outlook, the firm asserted. Melius also pointed out valuation concerns, saying that the giant appears expensive based on their revised free cash flow forecasts.
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based company operating through Productivity and Business Processes, Intelligent Cloud, and Personal Computing segments. Founded in 1975, the company provides software, services, devices, and solutions worldwide.
While we acknowledge the potential of MSFT 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 MSFT and that has 100x upside potential, check out our report about this cheapest AI stock.
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