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Investing.com -- In a recent analysis of the software sector, Oppenheimer has identified four standout companies positioned for growth in the evolving technology landscape.
These companies demonstrate strong potential in areas such as AI integration, cloud computing, and enterprise solutions, making them noteworthy for investors tracking the software industry.
Oppenheimer reiterates Agilysys as their top small and mid-cap pick, describing it as "the best story in SMiDCap software" despite being underfollowed and underowned. The company offers investors a visible path to reaccelerating top-line and EBITDA growth in 2026 and 2027, largely driven by its Marriott deployment.
Agilysys presents a unique opportunity to own a durable growth asset with potential to replatform the entire hospitality industry with its modern AI-embedded platform technologies. The company has a defensible competitive advantage in the AI era as a verticals leader, does not rely on a seat-based model, and serves as a system of record.
Success with Marriott’s revenue modernization vision could potentially influence other hotel brands and resorts to standardize on Agilysys to remain competitive.
Agilysys reported second-quarter fiscal 2026 results that surpassed analyst expectations, with revenue reaching $79.3 million, driven by a 33% year-over-year increase in subscription revenue. Following the strong results, both Cantor Fitzgerald and Needham raised their price targets on the company.
ServiceNow emerges as a standout winner in Oppenheimer’s IT buyer survey, showing healthy enterprise IT demand, back-office prioritization, and robust AI demand. The company is expected to be the first software name in Oppenheimer’s coverage universe to develop a material AI business, with management guiding to a $1B+ AI business in 2026.
ServiceNow offers investors durable 20% subscription revenue and 20% free cash flow growth, supported by a world-class sales organization and robust AI business. New revenue drivers include consumption, CRM, and AI Control Tower, complementing a strong IT business.
Oppenheimer notes that NOW shares have underperformed since summer but suggests this presents a buying opportunity for a high-quality business with market-leading products.
In recent developments, ServiceNow announced a strategic integration with Figma to help developers convert designs into enterprise applications and expanded its partnership with NTT DATA to accelerate AI-led transformation for global customers.
Salesforce is positioned to be a "bounce back stock" in 2026, according to Oppenheimer. The company is expected to be a winner in the AI transition due to its data gravity from the breadth and richness of customer data, and leadership from its CEO focused on navigating the industry technology transition.
While near-term growth appears less exciting with sub-10% top-line growth and business transition with Agentforce, Oppenheimer remains comfortable with their estimates based on positive trends in IT spending, recent price increases on core products, strong demand with Agentforce and Data Cloud, slightly easier year-over-year comparisons, and favorable foreign exchange trends. The current 6% free cash flow yield suggests limited downside risk.
Salesforce completed its acquisition of Informatica, an enterprise AI-powered cloud data management company, for approximately $8.3 billion in cash. The move is intended to strengthen the data foundation for Salesforce’s artificial intelligence applications.
Microsoft emerges as a big winner in Oppenheimer’s IT buyer survey, showing strength in enterprise IT demand, back-office prioritization, and robust AI demand. The company is considered most leveraged to the next waves of cloud and AI application modernization and expansion within Oppenheimer’s coverage universe.
While capacity constraints may limit Azure’s business growth in the near term, the release of Copilot 5 with embedded agentic, chat, and voice functionality has potential to increase average revenue per user and reinvigorate the M365 business.
New capacity deals could serve as positive catalysts for the stock, and the recent Ignite conference is expected to generate positive headlines from new product announcements.
Microsoft announced a significant investment of up to $5 billion in the AI company Anthropic. The deal is connected to Anthropic’s commitment to spend $30 billion on Microsoft’s Azure cloud computing platform.
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