In this article, we will take a look at 10 Cheap Software Stocks to Buy According to Analysts.
The software industry is changing at an unparalleled rate, with significant advances in programming languages, structures, frameworks, techniques, and other technologies. More specifically, the industry has benefited greatly from the growing need for digital transformation. Until recently, growth prospects have been attractive due to the rising use of Software-as-a-Service (SaaS), which offers a flexible and cost-effective distribution mechanism for apps. It also reduces deployment time compared to traditional systems. In that regard, the global SaaS industry was valued at around $3 trillion in 2022, marking the end of a decade of strong development, with McKinsey estimating that it might reach $10 trillion by 2030. However, McKinsey contends that the rapid emergence of generative AI (GenAI) has altered the software industry more drastically than the shift to SaaS. A notable example is ChatGPT’s introduction in late November 2022, which sparked a surge in investment. By 2023, large software firms had already invested over $15 billion in GenAI solutions, accounting for roughly 2% of the global corporate software industry. In contrast, it took SaaS spending four years to get the same market share.
At the same time, IT executives are turning to technology consolidation to address global economic concerns such as inflation, recession, and supply chain disruptions. According to Canalys’ IT Opportunity report, global IT investment would increase by 8.3% to $5.44 trillion in 2025. This builds on the rapid growth in 2024, which is expected to climb 7.7%, the fastest pace since the post-COVID technological boom of 2021. In that same vein, The Business Research Company predicts that the global software products market will rise from $1.8 trillion in 2024 to over $2.0 trillion in 2025, representing an 11.7% compound annual growth rate (CAGR).
While challenges exist on the path to growth, the bigger concern for the software industry at the moment is DeepSeek, a Chinese company that claims to produce artificial intelligence software at a fraction of the expense of large US software corporations. DeepSeek’s cheaper price should have forced US companies to reduce subscription costs and investments. However, this has had minimal effect on market sentiment towards American firms. In fact, AI income still accounts for a modest portion of their total revenues, and their supremacy remains largely intact. Furthermore, DeepSeek’s danger doesn’t seem to be immediate, as major US software companies have spent years improving and growing their corporate products.
Our Methodology
For our list of cheap software stocks to buy according to analysts, we used stock screeners to select firms with an average analyst upside potential of at least 20% greater than their current stock price. According to Wall Street experts, these equities are undervalued compared to their actual potential. All of these stocks have PE ratios below 25, as of March 7.
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. PagSeguro Digital Ltd. (NYSE:PAGS)
Forward P/E Ratio: 5.31
Analyst Upside: 20.61%
PagSeguro Digital Ltd. (NYSE:PAGS) offers payment and banking solutions to micro-merchants, consumers, small and medium-sized businesses, and individual entrepreneurs. It offers a variety of payment options, digital banking services, POS devices, and other complete financial services.
On February 18, JPMorgan analyst Domingos Falavina raised the price target for PagSeguro Digital Ltd. (NYSE:PAGS) to $12 from $11, maintaining a Neutral rating on the company. During a recent meeting with PagSeguro’s CFO Artur Schunck and IRO Gustavo Sechin, the company’s objective of exceeding its 11-15% earnings per share growth projection for 2025 was discussed in detail. The company is aggressively repricing goods to reach 70-80% of its client base and is taking initiatives to reduce financial expenses, such as decreasing returns on time deposits and certificates of deposit.
PagSeguro Digital Ltd. (NYSE:PAGS) recently posted its biggest quarterly net income in company history, with earnings per share for Q4 2024 above analysts’ estimates. The company’s actual EPS of 1.78 BRL was above the expectation of 1.7 BRL, while its revenues of 4.83 billion BRL exceeded the predicted 4.59 billion BRL
9. Dropbox, Inc. (NASDAQ:DBX)
Forward P/E Ratio: 9.16
Analyst Upside: 21.93%
Dropbox, Inc. (NASDAQ:DBX) provides cloud-based storage solutions that enable people and teams to securely manage their work and data from anywhere. It provides cloud storage, file synchronization, personalized cloud services, and client software.
On February 21, Citi analyst Steven Enders lowered the price objective for Dropbox, Inc. (NASDAQ:DBX) shares to $30 from $31, while keeping a Neutral rating. Enders noted that Dropbox recorded a minor sales beat, with revenues beating forecasts by 0.7% vs 0.2% in the previous quarter. The company’s sales increased by 1.86% over the previous year, while maintaining exceptional gross profit margins of 82.5%. However, Dropbox, Inc. (NASDAQ:DBX) is facing issues in its main business, as indicated by a quarterly decrease in annual recurring income and user counts. Enders speculated that massive stock buybacks may be the major element currently boosting the company’s stock price.
Dropbox, Inc. (NASDAQ:DBX) announced a $1.2 billion share repurchase program, with roughly 12.5 million shares repurchased for $350.4 million in the fourth quarter. The company also received a $2.0 billion private credit facility, which includes $1.0 billion in initial term loans expiring in 2029 and $1.0 billion in delayed draw term loan obligations through 2026.
8. Adeia Inc. (NASDAQ:ADEA)
Forward P/E Ratio: 10.35
Analyst Upside: 22.53%
Adeia Inc. (NASDAQ:ADEA) is a leading research and development business that accelerates the adoption of innovative technologies in the media, entertainment, and semiconductor sectors. It operates as a licensing company, licensing its ideas under the Adeia brand.
On February 19, Rosenblatt Securities raised the price target for Adeia Inc. (NASDAQ:ADEA) from $18 to $20 while maintaining a Buy rating on the company’s shares. The boost came after Adeia announced a solid fourth-quarter 2024 performance that exceeded expectations. A highlight of the quarter was the quick completion of a semiconductor hybrid bonding licensing agreement, which took only six months to conclude.
Adeia’s non-PayTV income also increased significantly, rising 18% year on year in 2024. This increase is especially important since it helps to offset the continued drop of PayTV subscribers, which is a trend across the industry. Furthermore, the company recently extended its intellectual property license arrangement with South Korea’s LG U+, assuring ongoing access to Adeia’s broad media library.
7. Salesforce, Inc. (NYSE:CRM)
Forward P/E Ratio: 23.89
Analyst Upside: 26.61%
Salesforce, Inc. (NYSE:CRM), headquartered in San Francisco, California, is an American cloud-based software firm that specializes in customer relationship management. The firm offers custom software and solutions built for a variety of areas, including sales, marketing automation, and analytics.
On February 27, BMO Capital Markets lowered its price target for Salesforce, Inc. (NYSE:CRM) to $367 from $375, while keeping an Outperform rating. The firm’s analysts commented on Salesforce’s Q4 performance, stating that the company presented a strong yet unremarkable report. According to BMO Capital, the company’s year-over-year rise in computed billings and free cash flow for the January quarter exceeded its expectations, with the company maintaining exceptional gross profit margins of 76.94% and achieving revenue growth of 9.53% over the previous twelve months. In addition, the prediction for fiscal year 2026 subscription revenue increase of 9% year on year on a constant currency basis matched their expectations.
Mar Vista Global Quality Strategy stated the following regarding Salesforce, Inc. (NYSE:CRM) in its Q4 2024 investor letter:
“Investors cheered a solid fiscal year Q3 performance from Salesforce, Inc. (NYSE:CRM), with results driven by strength in subscription revenues, current remaining performance obligations (CRPO), and operating margin. Both the Sales and Service Clouds returned to double-digit growth, fueled by strong adoption of multi-cloud and vertical-specific solutions. These results highlight Salesforce’s ability to address diverse customer needs and sustain growth across its core offerings.
Management expressed significant excitement about Agentforce, an organically developed generative AI product that is garnering enthusiasm from both system integrator partners and customers alike. This innovation underscores Salesforce’s commitment to delivering innovative solutions that enhance customer engagement and drive productivity. While Agentforce’s contributions to subscription revenues and CRPO bookings are still immaterial for now, the growing pipeline provides a solid foundation for optimism around Salesforce’s ability to productize and monetize its generative AI offerings.”
6. Global Payments Inc. (NYSE:GPN)
Forward P/E Ratio: 7.44
Analyst Upside: 28.94%
Global Payments Inc. (NYSE:GPN) is a US-based fintech firm that provides payment technology and software solutions to 4.6 million merchant accounts, 4,000 technology partners, and 1,500 financial institutions in more than 100 sectors worldwide.
On February 18, Citi analysts reduced their price target for Global Payments Inc. (NYSE:GPN) to $135 from $138, while maintaining a Buy rating. The analysts highlighted that the company’s status has not altered considerably since the announcement of its third-quarter data in late October, which they consider favorable, underlining the importance of consistency in improving stock performance. With sales of $10.1 billion and a high free cash flow yield of 11%, Global Payments’ continuing business shift seems to be taking shape.
Weitz Large Cap Equity Fund stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q3 2024 investor letter:
“We continued to increase the Fund’s positions in Global Payments Inc. (NYSE:GPN) and Idex Corp. during the quarter. Both stocks trade at significant discounts to our business value estimates. The companies have fundamental catalysts that could drive the stocks, but the timetable may have slipped a bit. The challenge is that investors want results now, especially in a bull market. We have specific milestones to track, and we think their achievement can be measured in quarters rather than years. In our view, the potential payoffs are well worth the wait.”
5. Consensus Cloud Solutions, Inc. (NASDAQ:CCSI)
Forward P/E Ratio: 4.17
Analyst Upside: 34.36%
Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) and its subsidiaries provide global information delivery services via a software-as-a-service platform. Its technology enables organizations to simplify client interactions across several channels such as phone, chat, and email.
On February 18, BTIG analyst David Larsen boosted Consensus Cloud Solutions, Inc.’s (NASDAQ:CCSI) price target to $37 from $32, maintaining a Buy rating on the stock. The firm spoke with CEO Scott Turicchi and feels that the company has not just turned a corner, but is gaining market share. BTIG notes that the company’s corporate revenue growth should remain at the 5%+ level while its innovative AI-driven solutions, including Clarity, jsign, Harmony, and Unite, gain traction.
Consensus Cloud Solutions, Inc. (NASDAQ:CCSI) announced fourth-quarter earnings of $1.32, $0.14 higher than analysts’ expectations of $1.18. The quarter’s revenue came in at $86.98 million, compared to the average expectation of $84.49 million. In addition, Consensus Cloud Solutions has set revenue expectations for 2025 at $343 million to $357 million, with a midpoint of $350 million. The company’s adjusted EBITDA target ranges from $179 million to $190 million. It also expects corporate revenue growth of 6% to 6.5%, with a 9.5% fall in its SOHO division.
4. Progress Software Corporation (NASDAQ:PRGS)
Forward P/E Ratio: 9.39
Analyst Upside: 34.60%
Progress Software Corporation (NASDAQ:PRGS) provides cloud-based security solutions to large and midsize enterprises in various sectors.
Progress Software Corporation (NASDAQ:PRGS) posted fourth-quarter profits above analyst forecasts, but shares slumped 5.5% in after-hours trade as the company’s guidance fell short of Wall Street predictions. The software company reported adjusted profits per share of $1.33 for the quarter, above analyst expectations of $1.21. Revenue also increased 21% YoY to $215 million, above estimates of $211.7 million.
However, Progress Software’s projection for the coming fiscal year disappointed investors. The company expects adjusted EPS for the full year 2025 to be $5.00-$5.12, much lower than the $5.62 projected by analysts. The first-quarter EPS forecast of $1.02-$1.08 also fell short of the $1.44 average target.
3. LiveRamp Holdings Inc. (NYSE:RAMP)
Forward P/E Ratio: 14.71
Analyst Upside: 35.00%
LiveRamp Holdings Inc. (NYSE:RAMP) is an American Software-as-a-Service company that provides a data connection platform. Its services include data onboarding and converting offline data into online marketing data.
LiveRamp Holdings Inc. (NYSE:RAMP) posted third-quarter EPS of $0.55, which was $0.09 more than the average expectation of $0.46. Revenue for the quarter came in at $195 million, compared to a consensus expectation of $190.44 million. Looking forward, Liveramp expects Q4 2025 revenue of $184 million to $186 million, compared to the analyst estimate of $186.4 million.
On February 26, Benchmark analysts maintained a Buy rating on LiveRamp Holdings Inc. (NYSE:RAMP) with a price target of $45. The firm’s analysts emphasized the company’s attempt to streamline its pricing system, which they anticipate would result in higher revenue and cost savings. During the second and third fiscal quarters, LiveRamp plans to test a new pricing model with about 10% of its current and new clients for a period of six to nine months. The new pricing approach intends to reduce the previous complicated system of 20-30 criteria to just five by establishing a credit system.
2. NICE Ltd. (NASDAQ:NICE)
Forward P/E Ratio: 10.52
Analyst Upside: 50.70%
NICE Ltd. (NASDAQ:NICE) offers AI-powered cloud platforms for digital business solutions across the world. Its services include CXone for customer experience, the Enlighten AI engine, and smart self-service solutions. The company employs artificial intelligence and analytics to avoid fraud and ensure AML compliance.
On February 21, RBC Capital Markets lowered its price target for NICE Ltd. (NASDAQ:NICE) to $200 from $260, while keeping an Outperform rating on the company. The decision followed NICE’s announcement of a cloud revenue shortfall and 2025 objectives lower than market expectations. NICE’s fourth-quarter results reflected a solid contribution from its Product division, which contrasted with lower cloud revenue. Despite implementation issues, the company’s fundamentals remain robust, with a 66.7% gross profit margin and a 13.5% revenue increase over the previous 12 months. The company’s cloud revenue challenges, however, have persisted, and large-scale contract implementations have impacted revenue recognition.
1. GigaCloud Technology Inc. (NASDAQ:GCT)
Forward P/E Ratio: 4.92
Analyst Upside: 86.48%
GigaCloud Technology Inc. (NASDAQ:GCT) is a pioneer in worldwide end-to-end B2B technology solutions for large parcels. The company’s B2B e-commerce platform, the GigaCloud Marketplace, unifies everything from discovery, payments, and logistical technologies into one simple platform.
GigaCloud Tech reported total revenues of $1.16 billion for 2024, a 65% increase over the previous year. Gross profit increased also by 51.2% to $285.2 million, while the company’s net income jumped 33.7% to $125.8 million. On the other hand, the company’s gross margin fell to 24.6% from 26.8% in 2023, and its net income margin dropped to 10.8% from 13.4% the previous year.
Moving forward, GigaCloud’s management underlined the need for global diversity and operational efficiency in driving long-term success. Larry Wu, founder and CEO of GigaCloud, stated that gross merchandise value in Europe increased 155% year on year, highlighting the broad popularity of GigaCloud’s Supplier Fulfilled Retail (SFR) model.
While we acknowledge the potential of GCT, our conviction lies in the belief that certain 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 GCT 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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