The software industry has firmly established itself as one of the most resilient and fastest-growing sectors in the global economy. As digital transformation continues to expand across various industries, businesses are increasingly relying on software solutions to enhance efficiency, support seamless growth, and foster innovation. The rising focus on automating workflows, improving customer experiences, and leveraging data-driven insights has sustained the high demand for software products.
What’s Driving Software Growth
Eric Compton, an equities strategist for Morningstar Research Services, underscored artificial intelligence and digital transformation as major drivers for growth in his Industry Outlook published on March 11. He projected consistent revenue and margin growth for the software sector, with total industry revenue anticipated to rise at an annual rate of 11% through 2029. Key factors supporting this growth include high customer retention due to switching costs, significant initial investments that translate into steady revenue streams, and sustained demand for digital transformation. Compton also identified AI adoption, increasing data requirements, and the shift to cloud-based solutions as central drivers for growth, while cautioning against potential challenges like higher interest rates, economic uncertainties, and regulatory issues.
The Morningstar strategist further emphasized that despite short-term fluctuations, the long-term demand for software remains strong, particularly in database software and customer experience applications, which are expected to grow at the fastest rate. Software companies gain an advantage from substantial upfront investments in R&D and customer acquisition, which lead to long-lasting, high-value client relationships. Compton also underlined the fact that most firms in the sector possess strong competitive advantages, or “moats,” primarily due to switching costs and network effects. Once a company adopts a software solution, shifting to a competitor is complex, ensuring a stable revenue stream. Although IT spending has normalized following the pandemic, ongoing automation, AI-driven advancements, and customer-oriented software solutions are expected to fuel sustained growth in the sector.
Opportunities in the Software Market
Recent performance in the global software industry has been marked by volatility. Jason Hunter, JP Morgan’s Head of Technical Strategy, shared insights in a January interview with CNBC, highlighting trends in the software and semiconductor sectors. He noted that while semiconductor stocks led market growth in 2024, the software sector gained momentum later in the year but underperformed in December. This pullback brought the valuation ratios of both large- and small-cap software stocks back to their breakout levels relative to semiconductors, offering a more favourable risk-reward scenario for software investments.
In conclusion, despite recent volatility and macroeconomic risks, the software sector remains an attractive space for investors due to its promising long-term outlook. Ongoing investments in cloud technology, AI, and digital transformation are expected to drive growth, with segments like database software, customer experience tools, and cybersecurity anticipated to expand at a faster pace. Companies that adapt to emerging technological trends, maintain strong customer retention, and use AI to drive innovation are likely to achieve the greatest success in the future.
With those insights in mind, let’s explore the 10 best software stocks to buy according to billionaires.
A close-up view of an AI-platform software code running on a monitor.
Our Methodology
To determine the 10 best software stocks to buy according to billionaires, we shortlisted the top 10 enterprise and application software stocks most favoured by billionaire investors, leveraging Insider Monkey’s Q4 2024 database on billionaire holdings. We then arranged the shortlisted stocks in ascending order based on the number of billionaire investors holding stakes in each company as of Q4 2024. Additionally, we provided insights into hedge fund sentiment surrounding these stocks, using data from Insider Monkey’s Q4 2024 database of hedge funds.
Note: All pricing data is as of market close on March 14.
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 Software Stocks to Buy According to Billionaires
10. Workday Inc. (NASDAQ:WDAY)
Number of Billionaire Investors: 15
Billionaire Holdings: $1.7 Billion
Number of Hedge Fund Holders: 89
Workday Inc. (NASDAQ:WDAY) is a leading provider of enterprise cloud applications for finance and human resources. The company offers a suite of financial management, human capital management (HCM), and analytics applications designed to help organizations optimize their operations.
Workday Inc. (NASDAQ:WDAY) has seen tremendous growth in the last eight years with revenue surging from $1.6 billion in 2016 to $8.4 billion in 2024, reflecting a robust compounded annual growth rate (CAGR) of 23% over the period. Growth momentum should continue as the company still sees a total addressable market of $160 billion, and expects around 15% annual subscription revenue growth in FY 2026 and 2027, and to achieve an adjusted operating margin of 30% by 2027. With a growing customer base and strong retention rates, the company is poised for sustained growth as enterprises increasingly prioritize digital transformation.
BMO Capital analyst Daniel Jester recently increased Workday Inc. (NASDAQ:WDAY)’s price target from $300 to $314 while maintaining an Outperform rating. The company recently reported stronger-than-expected Q4 results which led the analyst to raise his estimates and thus the price target. In addition to the revision, he highlighted the company’s evolving AI-driven strategy, which leverages four key areas to enhance growth and efficiency. This approach provides management with multiple pathways for value creation, an aspect the analyst believes is not fully recognized by investors in current discussions.
9. Intuit Inc. (NASDAQ:INTU)
Number of Billionaire Investors: 15
Billionaire Holdings: $6.8 Billion
Number of Hedge Fund Holders: 89
Intuit Inc. (NASDAQ:INTU) is a leader in financial software solutions, catering to individuals as well as small and medium-sized businesses to help them manage their finances effectively. Its renowned products include TurboTax for tax filing, QuickBooks for accounting, and Credit Karma for credit monitoring. Additionally, Intuit is the owner of Mailchimp, a prominent email marketing platform.
According to its annual stockholder presentation, Intuit Inc. (NASDAQ:INTU) estimates that it has currently captured only 5% of its total addressable market, which is projected to expand to an impressive $326 billion. This growth potential is driven by core business expansion, ecosystem enhancements, and international market penetration. Looking ahead, the company recently confirmed its FY 2025 guidance, forecasting total revenue growth of 12%-13% and adjusted EPS growth of 13%-14%.
On March 7, Mizuho Securities analyst Siti Panigrahi reiterated a Buy rating on the stock, highlighting multiple positive factors. Chief among them were the consistent improvements in IRS tax-filing data and the anticipated benefits from late-season filings. The analyst further emphasized that the conclusion of TurboTax’s early-bird pricing is expected to increase the proportion of filings at higher average selling prices, boosting revenue. Moreover, the expanding adoption of TurboTax Live Full Service was identified as a crucial growth driver for Intuit in fiscal year 2025.
8. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Billionaire Investors: 16
Billionaire Holdings: $2.3 Billion
Number of Hedge Fund Holders: 64
Palantir Technologies Inc. (NASDAQ:PLTR) is a software company that builds and deploys data integration and analytics platforms for both government and commercial clients. The company’s flagship products including Palantir Gotham and Palantir Foundry, enable users to analyze large datasets for actionable insights. Its solutions are widely used in defense, healthcare, and financial services, among other sectors.
Palantir Technologies Inc. (NASDAQ:PLTR) was among the top-performing stocks in 2024, delivering an impressive 340% rally. The company benefited significantly from the AI-driven euphoria, witnessing substantial growth in its platforms, particularly the Artificial Intelligence Platform (AIP). Over the past several quarters, Palantir has consistently reported accelerating revenue growth and improved profitability, fueling investor confidence. Its shares also recently received a boost following real-world applications demonstrated by various companies at its AIPCon 6 event, which enhanced the credibility of its platforms. Furthermore, Palantir announced new partnerships with organizations such as Databricks, Saronic Technologies, Archer, and Saildrone, further expanding its enterprise solutions portfolio.
On March 13, Loop Capital analyst Mark Schappel reiterated his Buy rating on the stock after a meeting with management which strengthened his confidence in its investment thesis. The analyst highlighted the company’s position as a leader in enterprise AI, noting that the industry is at a turning point, with pilot programs transitioning into full-scale deployments and AI adoption accelerating across industries. At the same time, he also noted risks from potential federal spending cuts and high valuation amid market volatility. While he reiterated his positive outlook, the analyst reduced Palantir Technologies Inc. (NASDAQ:PLTR) price target from $141 to $125 to incorporate compression in industry valuation multiples.
7. Shopify Inc. (NYSE:SHOP)
Number of Billionaire Investors: 16
Billionaire Holdings: $1.5 Billion
Number of Hedge Fund Holders: 64
Shopify Inc. (NYSE:SHOP) is a Canadian e-commerce company that provides a cloud-based platform for businesses to create and manage online stores. The platform offers tools for payments, marketing, shipping, and customer engagement, making it a one-stop solution for merchants.
On March 6, Wells Fargo analyst Andrew Bauch reaffirmed a Buy rating on Shopify Inc. (NYSE:SHOP) with an unchanged price target of $135. For his positive stance, he cited confidence in the company’s momentum across enterprise, offline, and B2B sectors. He believes that the company is addressing tariff-related challenges by strengthening local commerce, a key move given its reliance on cross-border transactions.
The analyst further noted that merchant growth remained strong, with expansion evenly spread between Europe and the U.S., reinforcing Shopify Inc. (NYSE:SHOP)’s market presence. The enterprise segment offers significant potential, as businesses often start with Shopify’s payment solutions before adopting more services. The analyst concluded that with AI-driven efficiencies, stable headcount, and a disciplined investment approach, Shopify Inc. (NYSE:SHOP) is well-positioned to maintain margin strength while continuing to scale.
6. Atlassian Corp. (NASDAQ:TEAM)
Number of Billionaire Investors: 17
Billionaire Holdings: $2.9 Billion
Number of Hedge Fund Holders: 75
Atlassian Corp. (NASDAQ:TEAM) is an Australian software company that designs and develops enterprise software platform for project management, collaboration, issue tracking, integration, deployment, and support services. Its flagship products, Jira and Confluence, are widely used for project management and team collaboration. The company also offers Trello, Bitbucket, and other tools that empower teams to work efficiently.
In a report dated February 2, Barclays analyst Ryan MacWilliams shared a positive outlook on Atlassian Corp. (NASDAQ:TEAM). He highlighted that the company delivered stronger-than-expected quarterly results, driven by enterprise growth and steady performance in the small business segment. MacWilliams believes investor confidence in Atlassian’s medium-term revenue growth will improve, given management’s optimistic remarks about increasing customer spending and growing interest in cloud migration. As a result, the analyst raised his price target on Atlassian Corp. (NASDAQ:TEAM) to $350 from $275 and maintained an Overweight rating on the shares.
5. Adobe Inc. (NASDAQ:ADBE)
Number of Billionaire Investors: 18
Billionaire Holdings: $5.8 Billion
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) is a global leader in creative and digital marketing software. Its flagship products, such as Photoshop, Illustrator, and Acrobat, have become industry standards for content creation and document management, serving a diverse range of customers from individual creators to large enterprises. Adobe’s Creative Cloud, Document Cloud, and Experience Cloud platforms empower users to create, collaborate, and enhance digital experiences.
Recently, Adobe reported better-than-expected results for Q1 2025 and provided Q2 guidance that aligned with market expectations. However, changes in its subscription revenue disclosure raised concerns among analysts. A Citi analyst with a Neutral rating on the stock noted that the new reporting approach complicates tracking the performance of Creative Cloud’s core business.
In contrast, RBC Capital analyst Matthew Swanson viewed the strong Q1 results positively. He highlighted Adobe’s efforts to introduce new metrics, helping investors gain deeper insights into the business. Swanson also pointed out that attention is shifting to the upcoming Adobe Summit, where the company is expected to unveil more details about monetizing its AI tools. Despite maintaining an Outperform rating, the analyst adjusted his price target for Adobe Inc. (NASDAQ:ADBE) from $550 to $530, reflecting a cautious approach.
4. Snowflake Inc. (NYSE:SNOW)
Number of Billionaire Investors: 18
Billionaire Holdings: $2.1 Billion
Number of Hedge Fund Holders: 85
Snowflake Inc. (NYSE:SNOW) is a cloud-based data platform that helps organizations efficiently store, analyze, and share data. Its Data Cloud enables businesses to consolidate data together in one secure and reliable place, driving innovation and valuable insights. The platform supports a variety of workloads, including data engineering, data science, and application development.
In Q4 2024, Snowflake Inc. (NYSE:SNOW) reported product revenue of $943.3 million, reflecting a 28% year-over-year increase and surpassing the average expectation of $916 million. The company now has 580 customers spending more than $1 million over a trailing 12-month period, up from 542 in the previous quarter. With a rapidly growing customer base and a strong presence in the market, Snowflake Inc. (NYSE:SNOW) is well-positioned to capitalize on opportunities in the data analytics industry.
On March 10, D.A. Davidson analyst Gil Luria reaffirmed a bullish outlook on Snowflake Inc. (NYSE:SNOW), maintaining a Buy rating with a price target of $225. The consensus also reflects a positive sentiment toward the stock, with a 1-year median price target of $215, indicating a potential upside of 38%.
3. ServiceNow Inc. (NYSE:NOW)
Number of Billionaire Investors: 19
Billionaire Holdings: $3.9 Billion
Number of Hedge Fund Holders: 110
ServiceNow Inc. (NYSE:NOW) provides a cloud-based platform for digital workflows, enabling organizations to automate and optimize their business processes. Its Now Platform offers solutions across IT service management, customer service, HR, and other areas.
With a strong focus on innovation and an expanding product portfolio, the company has already established itself as a key player in the enterprise software market. Driven by the growing demand for workflow automation, ServiceNow Inc. (NYSE:NOW) is expected to maintain steady growth. Building on this strength, the company announced on March 10 that it is acquiring the artificial intelligence firm Moveworks (a private company) for $2.85 billion. According to the company, Moveworks brings features such as a front-end AI assistant and enterprise search technology, which will enhance ServiceNow Inc. (NYSE:NOW)’s AI and automation capabilities to create new opportunities.
Although the acquisition has yet to significantly impact the stock, Stifel Nicolaus analyst Brad Reback reaffirmed a Buy rating on the shares, assigning a price target of $1,175. This figure is close to the consensus 1-year median price target of $1,200, suggesting a potential upside of over 40%.
2. Salesforce Inc. (NYSE:CRM)
Number of Billionaire Investors: 23
Billionaire Holdings: $9.0 Billion
Number of Hedge Fund Holders: 162
Salesforce Inc. (NYSE:CRM) is a global leader in customer relationship management (CRM) software. Its cloud-based platform provides solutions for sales, service, marketing, and commerce, enabling businesses to build stronger customer connections using the power of data and AI. Salesforce’s AI-driven tools, including Einstein, offer predictive insights and automation to boost productivity.
On March 12, Salesforce Inc. (NYSE:CRM) announced its plan to invest $1.0 billion in Singapore over the next five years. The company aims to accelerate Singapore’s digital transformation and promote the adoption of Agentforce. With Singapore’s labor force growth slowing due to an aging population and lower birth rates, Agentforce offers a solution to quickly strengthen the workforce in essential service and public sector roles. Similarly, in February, the company had announced a $500 million investment in the Kingdom of Saudi Arabia.
In late February, the company reported strong FY 2025 (FY ending in January) revenue of $37.9 billion, reflecting a 9% year-over-year increase. Total remaining performance obligation (RPO) rose 11% YoY to $63.4 billion, while free cash flow grew a robust 31% to $12.4 billion. However, revenue guidance for FY 2026 was slightly below expectations, with an anticipated range of $40.5-$40.9 billion compared to the consensus estimate of $41.5 billion. Despite this, the street maintains a positive long-term outlook on Salesforce Inc. (NYSE:CRM), with consensus forecasts suggesting an upside potential of 43%.
1. Microsoft Corp. (NASDAQ:MSFT)
Number of Billionaire Investors: 39
Billionaire Holdings: $53.4 Billion
Number of Hedge Fund Holders: 317
Microsoft Corp. (NASDAQ:MSFT) develops and markets software, hardware, and cloud services. Its flagship products include the Windows operating system, the Microsoft Office suite, and the Azure cloud platform. Additionally, Microsoft owns LinkedIn, GitHub, and Xbox, extending its influence across various industries.
On March 13, a D.A. Davidson analyst increased the price target for Microsoft Corp. (NASDAQ:MSFT) from $425 to $450 and upgraded the stock to Buy. The analyst referred to Microsoft as the best-positioned company among the “Magnificent 7,” a term used for leading mega technology companies, citing its more disciplined approach to capital expenditures (capex) as a key factor for the upgrade.
This perspective was based on Microsoft’s guidance during the Q2 2025 results call, where the company projected flat sequential capex for Q3 and Q4. Additionally, capex for FY 2026 is expected to be lower than that of FY 2025. The analyst views Microsoft Corp. (NASDAQ:MSFT) as a defensive play due to its relatively limited exposure to consumer end-markets compared to other major tech companies.
While we acknowledge the potential of MSFT 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 MSFT 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 30 Best Stocks to Buy Now According to Billionaires.
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