Jim Cramer, the host of Mad Money, said on Friday that he wants to help viewers find buying opportunities in software stocks that have sold off too aggressively. To do that, non-small-cap software and tech services companies were screened, with a focus on ones that are down at least 25% from 52-week highs, trade at discounts to the S&P 500, grow earnings faster than the market, and remain profitable. Out of 176 companies in the sector, only 23 met all of those conditions.
If you own any software stocks, the last couple of weeks have been… hard… for your portfolio. Look at the iShares Expanded Tech-Software Sector ETF… It’s down over 30% from its September highs and 15% just in the last week and a half. Like I’ve told you before, a lot of this comes down to AI worries. These generative AI platforms are great at writing code, making it easier for big companies to develop their own software in-house. And at the same time, AI helps businesses do more with fewer employees, which is a problem for enterprise software firms that charge per user. Lately, we’ve seen a bunch of big announcements from Anthropic, the company behind Claude, which keeps rolling out AI tools that can potentially replace all sorts of non-revenue-generating jobs, and that’s caused Wall Street to give up on the enterprise software cohort en masse.
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Cramer said it has happened even when many of these companies post good quarterly results, which he emphasized has often been the case, and despite that, share prices have continued to slide. He noted that the selling has become so severe that, in some instances, high-quality companies are being tossed aside along with weaker ones, something he said he has been waiting to see. He added that he does not like every name in the group.
Here’s the bottom line: Yes, AI will hurt many enterprise software companies, but when you look at how much these stocks have already come down, I think there are real buying opportunities here as long as you stick with high-quality merchandise, especially cybersecurity stocks that simply shouldn’t be trading with the rest of the group like they are.
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 6. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2025, which was taken from Insider Monkey’s database of 978 hedge funds.
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).
Jim Cramer Identified 9 Software Stocks as Potential Undervalued Buys
9. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Holders: 66
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer noted that the trust is sticking by the stock despite the decline, as he said:
Now, here’s two that I just say, time to buy. We own Palo Alto Networks and CrowdStrike for the Charitable Trust. We’re sticking with them even though these stocks are down 29 and 30% from their highs, respectively. These are the top two consolidators in the cybersecurity space, and they’re so important to their customers that I see little or no possibility of or threat of AI disruption. I think that they could… work hand in hand with AI. If anything, AI means more business for them, though, because this new technology gives bad actors powerful tools to hack into your networks.
You almost never get a chance to buy Palo Alto or CrowdStrike at deep discounts, so if you don’t own them already, I would pounce. Of all the stocks mentioned, these two are my favorites because Anthropic cannot possibly duplicate or even improve on what they have built. We bought some CrowdStrike into this dip because the decline is way out of whack with the company’s prospects. We know that it might not bottom here, but sometimes you have to take a bit of risk with high-quality franchises.
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) provides cloud-based cybersecurity solutions. The company offers protection for endpoints, cloud systems, identities, and data.
8. Okta, Inc. (NASDAQ:OKTA)
Number of Hedge Fund Holders: 55
Okta, Inc. (NASDAQ:OKTA) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer highlighted that the stock was not a part of the list, as he commented:
Beyond that, I like three beaten-down cybersecurity names, because I think security’s important enough that most companies won’t want to experiment with having AI make their own in-house replacements. First is Okta, and they didn’t initially make the list because it’s only expected to have 7% earnings growth this year. It’s kind of unusual for this good company. But not long ago, CEO Todd McKinnon told me that Okta has a huge opportunity securing thousands, if not millions, of AI agents that are being created within the enterprise, and that resonated with me, frankly. With the stock selling for just 23 times this year’s earnings, it’s probably worth nibbling at.
Okta, Inc. (NASDAQ:OKTA) provides identity management and security solutions through products that enable secure access, authentication, and governance across cloud and on-premises systems. Cramer mentioned the company during the October 16, 2025, episode and remarked:
While we’re out here in San Francisco, it’s worth digging into why this market’s gotten so hostile to enterprise software, even the parts of the sector that previously seemed like ironclad… cyber security. Take Cramer family favorite, Okta, the leader in identity verification. These guys have excellent numbers and a very strong business. The last couple of quarters showed good strength, yet the stock’s actually down more than 30% from its highs in May. In fact, it’s even below where it bottomed after Liberation Day in April. No matter what Okta does right, it doesn’t seem like the market cares.
7. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 104
ServiceNow, Inc. (NYSE:NOW) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer highlighted the company’s expected earnings growth during the episode, as he said:
ServiceNow, which we had on the show last week, is also starting to look good, down over 50% from its high. They’re expected to grow earnings by 19% this year. And though you’d have to still pay a slight premium with the stock selling for nearly 24 times this year’s numbers, that’s down from nearly 70 times forward earnings at the end of 2024. ServiceNow also announced a big buyback last week, including a $2 billion accelerated buyback. So you have to assume that they’ll be right there buying along with you.
ServiceNow, Inc. (NYSE:NOW) provides a cloud platform that supports digital workflows through AI, automation, low-code tools, analytics, and a suite of IT, security, customer service, and employee experience products. Cramer discussed the stock during the February 2 episode and commented:
ServiceNow was the fourth worst performer with an almost 24% pullback… Now, I think ServiceNow really stands out as a poster child for what’s happening to the group. We just had chairman and CEO Bill McDermott on the show last Wednesday night after ServiceNow reported a very good quarter. That was a beat on every key line, mostly better than expected guidance for the current quarter and the full year. Now, honestly, I did think that the numbers would allow the stock to rebound. I thought it would at least get some lift, but I was wrong. Instead, it plunged 10% off the numbers, nearly 10%.
It was kind of amazing, frankly. Why did it happen? Because the numbers don’t matter when Wall Street doesn’t believe your industry has much of a future. All these beaten-down software companies are profitable. All of them have gotten cheaper on the way down. Doesn’t seem to matter… ServiceNow has gone from 64 times earnings to 28 times earnings.
6. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 119
Salesforce, Inc. (NYSE:CRM) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer noted that the stock is among those that look “enticing” and stated:
Well, those are my top five that passed the strict screen we ran to identify undervalued software stocks. But if you’re willing to step a little outside these strict parameters, I’ve got five more that are starting to look enticing. Well, first, there is Salesforce, which we own for the Charitable Trust.
It barely missed our final screen list because it’s growing earnings at a 12% clip this year, a little slower than the S&P and the aggregate. But man, Salesforce is down 43% from its 52-week high, selling for just 14 times this year’s earnings estimates, literally its lowest price to earnings multiple in history, including 2008, including the Great Recession. I think it’s near a bottom.
Salesforce, Inc. (NYSE:CRM) provides CRM-focused tools that help businesses manage customer interactions, use AI agents, analyze data, collaborate, and run marketing, commerce, and field service operations.
5. Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 96
Intuit Inc. (NASDAQ:INTU) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer said that the stock’s sell-off “doesn’t make much sense,” as he remarked:
What else? Okay, here’s one that I’m happy to buy. It’s Intuit, the company behind TurboTax and QuickBooks, with a stock that’s down more than 45% from its high, trading at just around 19 times this year’s earnings estimates. One of the great growth stocks of our era. I mean, this sell-off doesn’t make much sense.
Much of TurboTax is geared toward the consumer. The AI threat for that is therefore minimal. The rest of their software is geared to small and medium sized business, the kind of companies [that] really can’t afford to develop their own software internally, even with the help of AI. I think this one’s a baby that’s been thrown out with the bathwater, and I’d be a buyer right here, right now.
Intuit Inc. (NASDAQ:INTU) provides financial management, tax preparation, marketing, and personal finance solutions.
4. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 64
Workday, Inc. (NASDAQ:WDAY) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer highlighted the company’s valuation and its expected growth rate, as he commented:
Then there’s Workday, you’ve seen them on our show a lot. It makes software for human capital management and corporate finance. It’s a name-brand company. The stock’s fallen 43% from its highs to the point where it now trades at less than 15 times this year’s earnings estimates, despite the analysts expecting them to have an 18% growth rate.
Workday, Inc. (NASDAQ:WDAY) provides cloud-based applications designed to help organizations manage financial processes, human resources, and business planning. Polen Capital Management Llc stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its Polen Focus Growth Strategy’s Q4 2025 investor letter:
In Q4 2025, we initiated a new position in Intuitive Surgical and sold our positions in Netflix and Workday, Inc. (NASDAQ:WDAY). We exited our position in Workday as the company’s revenue growth continues to decelerate. The core human capital management business is fairly mature and now facing cyclical headwinds while the newer financials suite is growing slower than expected.
3. HubSpot, Inc. (NYSE:HUBS)
Number of Hedge Fund Holders: 63
HubSpot, Inc. (NYSE:HUBS) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer called the company controversial, as he said:
Third, there’s HubSpot. This is controversial. It’s a marketing, sales, and customer service software play with a stock that’s down 74% from its high, even worse than Atlassian. It’s considered to be a mini Salesforce. This company’s on track to put up 20% earnings growth this year, and its stock trades at 20 times this year’s numbers. Sure seems cheap to me.
That said, HubSpot reports next Wednesday, and given the way these stocks have been trading, I think maybe you wait for the quarter and then do some buying if it sells off on good numbers, which we’ve seen time and again over and over this earnings season. Keep in mind, HubSpot has not been one of my favorites, but it pops up on our screen as very cheap, and I can’t deny the screen identified it.
HubSpot, Inc. (NYSE:HUBS) provides a cloud-based platform that helps businesses manage marketing, sales, and customer service through automated tools and data analytics.
2. Atlassian Corporation (NASDAQ:TEAM)
Number of Hedge Fund Holders: 60
Atlassian Corporation (NASDAQ:TEAM) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer highlighted why the stock has been “obliterated,” as he remarked:
Now, a little more controversial. Let’s talk Atlassian, symbol TEAM, another collaboration software firm, mainly aimed at software developers. Because they make software for coders, and coding jobs are under threat from AI, the stock’s been obliterated, down over 70% from its 52-week high. But when Atlassian reported last night, it delivered a terrific beat and raise quarter.
It’s just that Wall Street didn’t care as the analysts nitpicked the company’s R&D spending, so the stock tumbled another 4% today. At this point, though, Atlassian’s expected to put up nearly 30% earnings growth this year. Yet the stock sells for just 20 times its 2026 earnings estimates. Look, it’s absurdly cheap unless you think the business is about to fall off a cliff, and some people think that. I do think AI is a real threat here, but my gut feeling says it’s a long-term threat, not something immediate.
Atlassian Corporation (NASDAQ:TEAM) develops collaboration and productivity software that connects teams and streamlines workflows.
1. Box, Inc. (NYSE:BOX)
Number of Hedge Fund Holders: 35
Box, Inc. (NYSE:BOX) is one of the software stocks that Jim Cramer named as potential undervalued buys. Cramer started his list with the stock and commented:
Let’s go through some of my favorites… Let’s start with Box… document storage and collaboration software play with a stock that’s down 36% from its high. CEO Aaron Levie was on CNBC earlier this week, and I thought he gave a great rebuttal to the idea that AI will make enterprise customers completely abandoned third party software… Box is expected to grow its earnings at a 15% clip this year, and it sells for just 16 times this year’s earnings estimates. That’s pretty darn cheap, especially since Box hasn’t had any trouble meeting the estimates.
Box, Inc. (NYSE:BOX) provides a cloud-based platform that allows organizations to securely manage, share, and collaborate on digital content from any device.
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