In this article, we will take a look at some of the best penny stocks in the software space that offer attractive upside potential to investors.
On March 6, The Morningstar Analysis, authored by Eric Compton and Dan Romanoff, highlighted the future direction for the software industry. This included an assessment of areas where growth can be achieved as well as an understanding of where artificial intelligence fits into the picture, going forward.
The most important finding in the assessment is that software revenues are expected to grow at more than 11% annually until 2029, with growth reaching 12% in 2025. As described by Morningstar, four primary drivers underlie the aforementioned growth trends. These include increased demand for artificial intelligence due to the use of generative technology, huge increases in data requiring storage and organization, increased use of public clouds requiring a shift away from internal systems, and the acceleration of digital transformation brought about by the pandemic.
The most important point mentioned in the article is that switching costs create high levels of customer loyalty in the software industry, with the cost of attracting one new customer initially high, while the customer’s value triples after 10 years. Under such conditions, it becomes increasingly important to identify software companies with wide moats due to switching costs and network effects.
With that background, let’s explore our 8 Best Software Penny Stocks to Buy Now.
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Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed software companies with share prices below $5 and market capitalizations above $200 million. Also, we only shortlisted stocks with at least 60% upside potential, according to analyst consensus as of the April 6 close. Finally, we selected 8 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).
8. Rimini Street Inc. (NASDAQ:RMNI)
Rimini Street Inc. (NASDAQ:RMNI) is one of the 8 best software penny stocks to buy now.
As of the April 6 close, Rimini Street Inc. (NASDAQ:RMNI) had a strongly bullish consensus sentiment. The stock received coverage from 4 analysts, 3 of whom assigned Buy ratings and 1 gave a Hold call. With no Sell rating, the stock has a projected median 1-year price target of $5.58, which leads to an upside potential of more than 62% at the prevailing level.
On March 31, Rimini Street Inc. (NASDAQ:RMNI) established a multiyear partnership with South Korea’s top rental company, Lotte Rental. The company has been selected by Lotte to curtail its IT-related expense bill and achieve digital transformation by leveraging Rimini Support™ for SAP and Oracle software.
Lotte Rental acknowledges that with Rimini’s support, the company will not face gaps in its support needs anymore and will also help execute an efficient ERP strategy. Changgeun Park, Head of IT at Lotte Rental, stated:
“Ensuring that our foundational enterprise systems are secure, flexible and primed for innovation is essential to achieving our vision to lead the mobility industry. Our partnership with Rimini Street provides us with a level of savings and quality of service unmatched in the industry.”
Rimini Street Inc. (NASDAQ:RMNI) is a software support provider, covering Oracle and SAP enterprise solutions. The company delivers managed services, enterprise software services, Agentic AI, and other solutions. It also offers an array of other solutions, including Rimini Agentic UX, Rimini Support, Rimini Manage, and Rimini Protect.
7. Weave Communications Inc. (NYSE:WEAV)
Weave Communications Inc. (NYSE:WEAV) is one of the 8 best software penny stocks to buy now.
On March 30, Weave Communications Inc. (NYSE:WEAV) acknowledged its collaboration with Minted Technology Advisors. The MintedCX advisory model is utilized by healthcare practices for the latest patient communication and engagement technologies.
Using their MintedCX program, Minted Technology Advisors assists health care institutions to enhance patient experience, efficiency within teams, and overall organizational effectiveness through proper guidance regarding technology choices. As an authorized Weave partner, Minted has played an essential role in assisting institutions to effectively adopt and utilize Weave’s communication technology solutions.
On March 30, Weave Communications Inc. (NYSE:WEAV) made an announcement regarding the immediate appointment of Ryan Dubin and Edward Robson as new independent directors. The new addition to the Board of Directors was finalized in conjunction with a cooperation agreement involving Engine Capital, 2717 Partners LP, and other associates.
Concurrently, the Board will also form a dedicated Finance Committee, which will work on promoting sustained shareholder value. David Silverman will serve as the chairman of this newly formed committee, while Tyler Newton, Edward Robson, and Ryan Dubin will also be part of it.
Weave Communications Inc. (NYSE:WEAV) provides an AI-powered patient communications, interaction, and transaction solution for small to medium-sized healthcare companies. It has an extensive portfolio which includes smart phone system, group messaging solutions, and SMS response assistants. It also offers scheduling services and insurance tools.
6. Telos Corp. (NASDAQ:TLS)
Telos Corp. (NASDAQ:TLS) is one of the 8 best software penny stocks to buy now.
On March 17, Wedbush reduced the price target on Telos Corp. (NASDAQ:TLS) from $10 to $8 while reiterating an Outperform rating on the stock. This downward revision comes on the back of the recent decline in the software sector. However, moving into the fiscal year 2026, the firm remains confident about the overall growth trajectory of the company.
That is because of the high demand for federal offerings. This conviction is maintained in the light of the fourth quarter financial report’s performance, which surpassed all primary indicators along with initial annual guidance that was in line with consensus expectations.
On March 17, Keith Bachman from BMO Capital reduced the price target on Telos Corp. (NASDAQ:TLS) from $8 to $5 while maintaining a Market Perform rating on the stock.
Telos produced an impressive quarter, posting revenue ahead of expectations due to strong growth in Security Solutions, particularly in Telos ID. The guidance for fiscal year 2026 met expectations, with awards serving as positive catalysts despite certain timing risks with the government.
Telos Corp. (NASDAQ:TLS) offers cyber, cloud-based, and corporate security services worldwide. It provides automated cyber risk management and compliance, AI services, as well as consulting, operations, and engineering solutions. Its services portfolio also includes identity verification, touchless fingerprint biometric technology, secure mobility solutions, and more.
While we acknowledge the potential of TLS 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 TLS and that has 100x upside potential, check out our report about the cheapest AI stock.
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