Top 3 Software Stocks Poised for 47%-63% Gains, Say Wall Street Experts
Wall Street analysts remain optimistic about the software sector, despite recent market fluctuations. The rise of artificial intelligence (AI) has reshaped many industries. Innovations like OpenAI’s ChatGPT and Anthropic’s Claude Cowork are rapidly changing how businesses operate. These shifts have led to uncertainty in software stocks, particularly as the iShares Expanded Tech-Software Sector ETF dropped over 22% from December 10 to February 3. However, analysts believe there are significant opportunities for growth in this sector.
Top Software Stocks with Promising Gains
According to Wall Street experts, three software stocks stand out, each showing potential gains ranging from 47% to 63%:
1. Datadog (DDOG)
- Potential Upside: 61%
- Current Price: $111.85
- Market Cap: $39 billion
- Recent Performance: Stock down from $200 in November
- Average Price Target: Implies 61% upside
Datadog specializes in cloud monitoring and security software. It assists companies in monitoring infrastructure, detecting threats, and improving cloud performance. Wall Street analysts expect a revenue growth of 20% by 2026. Notably, there has been speculation about Datadog securing a substantial deal with a major AI player, likely OpenAI. With 30 out of 33 analysts recommending a buy, the outlook is encouraging.
2. Snowflake (SNOW)
- Potential Upside: 63%
- Current Price: $168.56
- Market Cap: $58 billion
- Recent Performance: Up 7.56% today
- Average Price Target: Implies 63% upside
Snowflake, which provides a platform for data storage and analysis, went public in 2020. The company is bolstering its AI strategy through partnerships with firms like Palantir Technologies and has finalized a $200 million deal with OpenAI. CEO Sridhar Ramaswamy emphasizes that AI will enhance software functionalities rather than replace them. With a solid endorsement from analysts, 30 out of 33 recommend buying shares.
3. Microsoft (MSFT)
- Potential Upside: 47%
- Current Price: $401.14
- Market Cap: $3 trillion
- Recent Performance: Stock down over 23% in six months
- Average Price Target: Implies 47% upside
Microsoft, while primarily known for its software products, is also a key player in AI advancements. The decline in its stock price reflects concerns over growth in its Azure cloud services. Despite this, Microsoft 365’s AI features, such as Copilot with 15 million paid users, show promise. Analysts remain bullish with 34 out of 35 recommending a buy for its shares.
Conclusion
While the software market faces challenges amidst the rise of AI, Wall Street identifies notable opportunities for upside in stocks like Datadog, Snowflake, and Microsoft. Each company exhibits unique strengths, making them attractive prospects for investors focusing on the software sector.
