According to Oppenheimer's analysis, the top American software stocks worth paying attention to

Investing.com – After four consecutive years of underperformance compared to major indices, the U.S. software sector will face significant resistance in 2026.

{{pro_promotion | Upgrade to InvestingPro for more stock recommendations}}

Despite the challenges, Oppenheimer has identified some select software companies that are expected to perform well in a difficult market environment, where previous growth themes have become ineffective.

The software industry still lags behind other IT sectors in monetizing artificial intelligence, and investor confidence in long-term growth trajectories is waning. However, Oppenheimer believes that market sentiment could improve through macro clarity, expanding AI initiatives, cost control, and potential industry consolidation.

Below are the top software stocks based on Oppenheimer’s latest analysis:

Microsoft (NASDAQ:MSFT) - The tech giant’s Azure cloud platform is expected to improve in the second half of 2026 as new data centers reach scale. This expansion of computing infrastructure will enable Microsoft to capitalize on growing cloud computing and AI demand once capacity constraints are alleviated.

Microsoft was downgraded from buy to hold by Stifel due to concerns over its future Azure revenue outlook, but Piper Sandler reaffirmed its buy rating. The company also announced that security chief Charlie Bell will transition to a new role.

Salesforce (NYSE:CRM) and ServiceNow (NYSE:NOW) - Both companies need to overcome negative investor sentiment and execute M&A strategies effectively. Oppenheimer views them as thematic investments in the AI market, with potential to regain momentum through strategic initiatives and improved execution.

Recently, Salesforce announced a $5.6 billion contract with the U.S. Army. The company also received continued analyst support, with Stifel reaffirming a buy rating and Citizens maintaining an outperform rating.

ServiceNow reported fiscal Q4 2025 financial results, with revenue and EPS exceeding analyst expectations.

Agilysys (NASDAQ:AGYS) - This hotel software provider is expected to accelerate business and see significant profit improvement in fiscal 2027, mainly driven by its partnership with Marriott. This specific catalyst offers growth potential amid broader sector challenges.

Agilysys reported fiscal Q3 2026 financial results, with record revenue surpassing expectations, although its EPS did not meet analyst forecasts.

Oppenheimer recommends selective investing as the best strategy for navigating the software sector in 2026. Investors should focus on companies demonstrating sustainable growth potential, enhanced profitability, increased transparency in AI operations, and strong competitive advantages.

The firm has downgraded Adobe (NASDAQ:ADBE) from “Outperform” to “Market Perform,” citing slowing digital media growth and operational challenges during the AI transformation. Despite mid-term opportunities and attractive valuations, concerns over inconsistent execution, competitive positioning, and declining operating margins are expected to limit near-term upside.

Adobe has faced downgrades from multiple analysts, including Goldman Sachs, BMO Capital, and Jefferies, due to increased competitive pressures in the creative software market.

This article was translated with the assistance of AI. For more information, see our Terms of Use.