The global software market has witnessed tremendous growth over the past few decades, emerging as a key driver of productivity, economic expansion, and technological advancement. Software, in its broadest sense, includes a diverse range of programs and applications that power computers and other digital devices, enabling them to perform specialized tasks. These range from basic operating systems to sophisticated enterprise solutions and even cutting-edge quantum computing technologies.
The rapid expansion of the software industry is driven by increasing digital transformation, the widespread adoption of mobile technology, and continuous innovations in fields like artificial intelligence (AI). Additionally, with cyber threats and data breaches becoming more frequent and sophisticated, businesses are placing greater emphasis on data security and privacy. This has fuelled the rising demand for cybersecurity solutions, including encryption technologies, compliance tools, and advanced security applications, as the software sector continues to evolve to address these critical concerns.
According to an August 2024 report by Precedence Research, the global software market was valued at approximately $737 billion in 2024. Their projections suggest that it will surge to $2.25 trillion by 2034, reflecting a compound annual growth rate (CAGR) of 11.8%. The U.S. software market, one of the largest globally, is expected to reach $676 billion by 2034, growing at a CAGR of 12% between 2024 and 2034.
To put the current software market in perspective, Michael Wilson, CIO & Chief U.S. Equity Strategist at Morgan Stanley, shared his insights in a February 11 CNBC interview, discussing the near- to mid-term equity market outlook. While he anticipates market volatility over the next 3–6 months, he highlighted that software stocks have recently outperformed semiconductors. He attributes this shift to the growing diffusion of AI and the expansion of the application layer, which have driven greater investor interest in software. Although the semiconductor sector has experienced a temporary slowdown, Wilson emphasizes that it remains a cyclical industry rather than one in permanent decline. He also noted that advancements such as the DeepSeek AI-model announcement could renew excitement in AI and shift the focus back to software infrastructure.
With AI and machine learning becoming integral to various industries, the software market presents a compelling investment opportunity. Companies that demonstrate strong innovation in AI applications and have the potential to disrupt traditional industries are particularly well-positioned for long-term success.
With that in mind, let’s take a look at the 10 best-performing software stocks to buy according to analysts.
An experienced software engineer working on a complex line of code in a programming suite.
Our Methodology
To determine the 10 best-performing software stocks to buy according to analysts, we began by screening all U.S.-listed software companies with a market capitalization above $300 million and a stock price over $10, eliminating smaller and more volatile stocks. Next, we identified companies with year-to-date (YTD) returns of at least 20%, refining the selection further to include only stocks with a potential upside of 10% or more. Finally, we ranked the top 10 stocks based on YTD returns, placing the highest-performing ones at the top. Additionally, we also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: All pricing data is as of market close on February 25.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Performing Software Stocks to Buy According to Analysts
10. Amplitude Inc. (NASDAQ:AMPL)
YTD returns: 22%
Potential Upside: 25%
Number of Hedge Fund Holders: 18
Amplitude Inc. (NASDAQ: AMPL) is a digital analytics company that provides a Digital Analytics Platform designed to analyze behavioral data and deliver real-time, actionable insights to help businesses enhance their products and digital experiences.
Amplitude Inc. (NASDAQ: AMPL)’s stock has climbed ~22% YTD, reaching a 52-week high of $14.4 on February 20, 2025. Shares surged 22% following its Q4 2024 earnings report on February 19, which exceeded expectations. Additionally, company’s 2025 revenue and EPS guidance of $324.8–$330.8 million and $0.05–$0.10, respectively, came in ahead of analyst forecasts.
Analysts responded positively to the results and the guidance, leading to multiple upgrades and price target increases. One notable upgrade came from Baird analysts, who raised their rating from Neutral to Outperform and increased their price target from $12 to $17. They highlighted strong Q4 results, an encouraging 2025 outlook, and the company’s product and platform improvements as key factors driving potential growth acceleration. Additionally, they pointed to strategic go-to-market shifts and stronger execution as catalysts. With rising enterprise spending on analytics, analysts see Amplitude Inc. (NASDAQ:AMPL) well-positioned for growth and believe an improved valuation multiple is possible as momentum continues.
9. Asure Software Inc. (NASDAQ:ASUR)
YTD returns: 22%
Potential Upside: 13%
Number of Hedge Fund Holders: 8
Asure Software Inc. (NASDAQ:ASUR) is a provider of cloud-based human capital management (HCM) solutions designed to help businesses manage payroll, time tracking, benefits administration, and workforce management. The company’s Software platform is particularly focused on serving small and mid-sized businesses (SMBs), providing them with cost-effective HR solutions that improve efficiency and compliance.
Asure Software Inc. (NASDAQ: ASUR) experienced a lackluster performance in 2024, with its stock declining by 1.2%. However, in 2025, the stock has rebounded sharply, delivering a 22% year-to-date return. This surge has been driven largely by increasing optimism from analysts.
On January 6, analysts at Barrington included Asure Software Inc. (NASDAQ:ASUR) among their top stock picks for 2025. The following day, Lake Street analyst Eric Martinuzzi upgraded the stock from Hold to Buy, raising his price target from $9 to $13. His revised valuation was influenced by reports that Paychex (NASDAQ: PAYX) might acquire Paycor HCM (NASDAQ:PYCR), a development that strengthened his bullish outlook on Asure Software Inc. (NASDAQ: ASUR). Additionally, the analyst noted that the resilience of the U.S. job market could mean company’s 2025 guidance is overly conservative, further bolstering investor confidence.
8. Nebius Group (NASDAQ:NBIS)
YTD returns: 24%
Potential Upside: 52%
Number of Hedge Fund Holders: 66
Nebius Group (NASDAQ:NBIS) provides AI-focused infrastructure and services to developers worldwide through its cloud platform, Nebius AI. This platform offers a full-stack infrastructure, including large-scale GPU clusters, cloud services, and developer tools. Beyond its AI cloud offerings, the company also operates Toloka, a data solutions provider supporting generative AI development; TripleTen, an edtech platform focused on reskilling individuals for tech careers; and Avride, which develops autonomous driving technology for self-driving vehicles and delivery robots.
In December 2024, Nebius Group (NASDAQ: NBIS) raised approximately $700 million from investors to expand its full-stack AI infrastructure. Driven by this funding and the broader optimism surrounding AI, its stock has been on an upward trend since the start of the year, climbing 74% by February 18 to reach a 52-week high of $48.07, despite a 37% decline during the DeepSeek sell-off. However, following the release of its Q4 2024 earnings on February 20, shares dropped by 30%, leaving the stock with a 24% YTD gain.
For Q4 2024, the company reported impressive revenue growth of 466%, with its core AI infrastructure segment revenue surging 602%. However, annual recurring revenue (ARR) for its Nebius business reached $90 million, falling short of previous guidance due to longer customer acquisition lead times. Additionally, the adjusted net loss widened to $87.5 million, compared to $85.3 million in Q4 2023. These results led to mixed reactions from analysts, raising concerns about the company’s long-term profitability.
Despite this, an analyst from D.A. Davidson initiated coverage on Nebius Group (NASDAQ:NBIS) with a Buy rating and a $50 price target, believing the company is emerging as one of the first real alternatives to the hyperscaler-dominated AI compute market.
7. Uber Technologies Inc. (NYSE:UBER)
YTD returns: 24%
Potential Upside: 20%
Number of Hedge Fund Holders: 166
Uber Technologies Inc. (NYSE: UBER) is a technology platform that utilizes its vast network, cutting-edge technology, and operational expertise to facilitate transportation and logistics services. The company offers ride-hailing, food delivery, and freight transportation, with key segments including Uber Eats for food delivery, Uber Freight for logistics, and advancements in autonomous vehicles and aerial ridesharing.
After a flat performance in 2024 (-2%), Uber Technologies Inc. (NYSE: UBER)’s stock has climbed approximately 24% in 2025. A major catalyst for the recent surge was investor Bill Ackman’s disclosure on February 7 that his hedge fund, Pershing Square Capital Management, holds 30.3 million shares of the company. The fund had been accumulating shares since early January, leading to a 16% jump in the stock following the announcement.
Analyst sentiment on Uber Technologies Inc. (NYSE: UBER) remains largely positive, with a consensus price target of $90, implying a potential upside of over 20% from current levels.
6. JFrog Ltd. (NASDAQ:FROG)
YTD returns: 25%
Potential Upside: 25%
Number of Hedge Fund Holders: 32
JFrog Ltd. (NASDAQ:FROG) is a DevOps company that provides a hybrid, universal, end-to-end software supply chain platform to ensure secure and seamless software updates from code to production. The company focuses on its vision of “Liquid Software,” enabling always-on, always-current software.
Weaker financial results reported in 2024 led to a 15% decline in JFrog Ltd. (NASDAQ:FROG)’s stock in 2024. However, the company saw a significant turnaround in early 2025, with strong Q4 2024 earnings reported on February 13. Both revenue of $116 million and EPS of $0.19 exceeded analyst expectations, while deal wins also came in stronger than anticipated.
Further boosting sentiment, a day before earnings, JFrog Ltd. (NASDAQ:FROG) announced a collaboration agreement with Amazon Web Services (AWS) to help enterprise customers migrate workloads to AWS and maximize the value of their cloud-based software supply chain investments. These positive developments have driven a 25% year-to-date gain in the stock. Analyst’s outlook on the stock is broadly positive currently with consensus price target of $46 reflecting a 25% upside.
5. Monday.com Ltd. (NASDAQ:MNDY)
YTD returns: 26%
Potential Upside: 28%
Number of Hedge Fund Holders: 68
Monday.com Ltd. (NASDAQ:MNDY), an Israel-based company, offers a Work Operating System (Work OS) that allows organizations to build customized work management tools, automate workflows, and enhance collaboration. Its flexible, no-code/low-code platform supports project management, customer relationship management (CRM), and operational planning.
In 2025, Monday.com Ltd. (NASDAQ:MNDY) has seen its share price climb over 26%, driven by its expansion into AI-powered automation and enterprise solutions, positioning it as a key player in modern work management. A significant portion of these gains came from a 26% surge following strong Q4 2024 earnings. The company reported revenue of $268 million, up 32% year-over-year, and an adjusted EPS of $1.08, both exceeding analyst expectations.
Management remains optimistic about future growth, emphasizing the impact of AI on enhancing customer experience. Sharing his positive outlook on the company, CFO Eliran Glazer stated:
“Our 2024 results reflect our ongoing commitment to driving highly efficient growth through nearly any macroeconomic environment, with record GAAP and non-GAAP operating margins and free cash flow and surpassing $1 billion in annual recurring revenue (ARR). We are entering 2025 from a position of strength, and we remain as confident as ever in the exciting growth opportunities we see ahead.”
4. Semrush Holdings Inc. (NYSE:SEMR)
YTD returns: 27%
Potential Upside: 20%
Number of Hedge Fund Holders: 27
Semrush Holdings Inc. (NYSE:SEMR) offers a software platform that helps businesses enhance their online presence (services commonly known as SEO (Search Engine Optimization)). The platform enables companies worldwide to identify and timely engage with their target audience through the right channels. By collecting and analyzing vast amounts of data from millions of sources, the company provides valuable insights into market trends, helping businesses refine their strategies, improve products, and optimize marketing efforts.
After a weak 2024, where its share price declined 13%, Semrush Holdings Inc. (NYSE:SEMR) has rebounded strongly in 2025, gaining 27% YTD. This momentum has been largely driven by multiple analyst upgrades and new coverage in early January. On January 13, a Morgan Stanley analyst upgraded the stock to Overweight from Equal Weight, increasing the price target from $17 to $20. The analyst sees Semrush Holdings Inc. (NYSE: SEMR) as a leader in online visibility management, with significant growth potential in the enterprise market. They believe that easing pressures on small businesses and freelancers, along with improving profit margins, could support a sustained 20% revenue growth—an opportunity the market has yet to fully appreciate.
On January 14, Northland analyst Luke Horton initiated coverage on Semrush Holdings Inc. (NYSE:SEMR) with an Outperform rating and a price target of $18, further reinforcing the positive sentiment around the stock.
3. CSG Systems International Inc. (NASDAQ:CSGS)
YTD returns: 31%
Potential Upside: 12%
Number of Hedge Fund Holders: 23
CSG Systems International Inc. (NASDAQ:CSGS) provides software solutions that support businesses in the telecom, media, and financial services sectors with revenue management and customer experience enhancement. Its cloud-based platforms streamline billing, customer engagement, and payment processing, enabling companies to operate more efficiently and drive revenue growth.
After a largely underwhelming 2024, CSG Systems International Inc. (NASDAQ:CSGS) saw a strong rebound beginning in November, following the release of impressive Q3 2024 results and the announcement of a contract renewal with Comcast, extending through 2030. Alongside an upward revision in its profitability guidance for FY 2024, the stock surged 17% on November 7. However, despite this rally, shares still closed 2024 with a 4% decline.
In 2025, the stock has continued to benefit from rising investor expectations. Rightfully so, as the company delivered stronger-than-expected Q4 2024 results on February 5. This performance led to widespread positive sentiment among analysts, prompting several price target upgrades. Among them, RBC Capital analyst Dan Bergstrom raised his target from $58 to $69 while maintaining an Outperform rating, citing strong deal activity, solid contract renewals, and improving business fundamentals.
2. Cloudflare Inc. (NYSE:NET)
YTD returns: 33%
Potential Upside: 12%
Number of Hedge Fund Holders: 55
Cloudflare Inc. (NYSE:NET) runs a global connectivity cloud network that helps make websites, apps, and business systems faster, safer, and more reliable. It protects against cyberattacks, speeds up website loading times, and ensures secure access to online services. Its key offerings include content delivery networks (CDN), distributed denial-of-service (DDoS) protection, zero-trust security solutions, and web performance optimization.
Cloudflare Inc. (NYSE:NET) is up 33% YTD. The company continued to benefit from the increasing need for cybersecurity, zero-trust security frameworks, and edge computing solutions. Apart from this, the reason for the strong YTD performance was the Q4 2024 results on February 6, which exceeded expectations. Revenue for the quarter rose up 27% YoY to around $460 million, 2% above consensus. EPS of $0.19 came in 5% ahead of expectations. Company guidance was mixed but profitability in FY 2025 is expected to be better.
After the results, analysts from Argus have reiterated their Buy rating with a higher price target of $205, up from $108 earlier. The analysts are optimistic from the ongoing restructuring which has started to show results, in his view, with improved sales productivity and profitability.
1. Cerence Inc. (NASDAQ:CRNC)
YTD returns: 50%
Potential Upside: 15%
Number of Hedge Fund Holders: 10
Cerence Inc. (NASDAQ:CRNC) develops AI-powered virtual assistants for the mobility and transportation industry, primarily serving the automotive sector.
The company endured a difficult 2024, with its stock plunging as much as 87% between January and mid-November before ending the year 60% lower. While Cerence Inc. (NASDAQ:CRNC) has been gradually losing market share to competitors and alternative technologies in recent years, the sharp decline was primarily triggered by an unexpected and significant downward revision of its full-year revenue guidance for 2024, as announced with its Q2 2024 results in May 2024.
Interestingly, investor sentiment shifted dramatically since mid-November after the company unveiled its Cerence Automotive Large Language Model (CaLLM) Edge, an embedded AI model designed to function independently, even without internet connectivity. This announcement sent the stock soaring threefold in just two days (November 21-22).
The momentum continued into early 2025 when Cerence Inc. (NASDAQ:CRNC) announced an expanded partnership with NVIDIA in January to enhance the CaLLM model using NVIDIA AI Enterprise, a cloud-native AI platform. Following this news, the stock surged 157% in the first four trading days of the year, reaching $20.2, before retreating to around $11.8, still up 50% YTD.
Despite the recent rally, analysts remain cautious about further upside, with a consensus price target suggesting a 12% potential upside, reflecting lingering uncertainties about sustainability of Cerence Inc. (NASDAQ:CRNC)’s long-term growth prospects.
While we acknowledge the potential of CRNC to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CRNC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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