In this article, we will discuss the 10 Oversold Software Stocks to Buy According to Analysts.
As per The Business Research Company, a leading market research firm, the increased automation of business processes can fuel the growth of the broader software services market. The use of automation software remains a superior method of limiting costs where an opportunity lies to expand customer service while constantly reducing expenses. Therefore, the use of automation in business processes can improve the demand for software services market. Technological advancement remains the key trend that has been gaining popularity.
The Business Research Company believes that renowned companies operating in the software service market continue to develop innovative products, including cloud infrastructure platforms, in a bid to address larger customer bases.
What Lies Ahead for the Software Industry?
S&P Global expects that uneven global macroeconomic conditions might influence IT spending in 2025. That being said, the firm sees another year of strong software growth of ~10% in 2025 as compared to ~9% in 2024. This marginal acceleration in the rate sustains the growth trend of the previous 2-3 years, with some uplift expected due to AI-associated spending. The AI-related spending growth is expected to outpace that of overall software growth, although it will make up a smaller share—lower than 10%—of the total spending, which is expected to be in the range of $1 trillion – $1.2 trillion.
The firm expects that key drivers will include enterprise digital transformation initiatives, AI integration in software, and business automation workflows in a bid to enhance efficiencies, and a strong focus on cloud and network security, among others.
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AI To Help the Software Industry’s Growth
In 2024, software spending remained resilient, demonstrating the power of the recurring subscription model, although growth rates among smaller, sponsor-owned software providers were much lower, says S&P Global. The software segment (~10%) is expected to outpace the overall IT industry. While AI-associated gains remain nascent overall, the firm expects that continued strong growth among software vendors validates the strategy of offering productivity gains and reducing customers’ operational costs.
While the AI hype has not yet translated to significant software revenues for large SaaS companies, client interest remains robust. The companies believe that ongoing technological development and investment can result in deal activity. Therefore, S&P Global expects enterprise AI experimentation and interest to remain elevated, with new product rollouts garnering incremental growth and value-based average selling price increases for software vendors.
Amidst such trends, we will now have a look at the 10 Oversold Software Stocks to Buy According to Analysts.
A close-up view of an AI-platform software code running on a monitor.
Our Methodology
To list the 10 Oversold Software Stocks to Buy According to Analysts, we used a screener to shortlist the stocks catering to the broader software sector. Next, we chose the ones that have declined significantly over the past 6 months and that analysts see significant upside to. Finally, the stocks were arranged in ascending order of their average upside potential, as of February 14. We also mentioned the hedge fund sentiment around each stock, as of Q3 2024.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Oversold Software Stocks to Buy According to Analysts
10) Marqeta, Inc. (NASDAQ:MQ)
% Decline Over Past 6 Months: ~33.2%
Average Upside Potential: ~52.7%
Number of Hedge Fund Holders: 33
Marqeta, Inc. (NASDAQ:MQ) operates a cloud-based open application programming interface platform that delivers card issuing and transaction processing services. In Q3 2024, the company’s growth trajectory was aided by lapping of Block contract renewal, while at the same time, demonstrating operational discipline to fuel robust adjusted EBITDA. This, together with numerous new product announcements, enhances Marqeta, Inc. (NASDAQ:MQ)’s platform to offer transformative payment solutions at scale for its expanding customer base.
For example, the company rolled out the Portfolio Migration service which reduces complexity for customers who plan to upgrade existing card programs onto Marqeta, Inc. (NASDAQ:MQ)’s platform, without impacting their existing cardholder experience. Notably, the company has migrated millions of Klarna cards in Europe onto its platform from Klarna’s incumbent processor. For Q4 2024, Marqeta, Inc. (NASDAQ:MQ) expects net revenue growth of 10% – 12% and gross profit growth of 13% – 15%.
The growth in the software industry resulted in a surge in embedded finance, where non-financial companies tend to integrate financial services into their offerings. Marqeta, Inc. (NASDAQ:MQ)’s flexible platform enables businesses throughout sectors to embed payment solutions easily, expanding the customer base.
9) PDF Solutions, Inc. (NASDAQ:PDFS)
% Decline Over Past 6 Months: ~30.1%
Average Upside Potential: ~61.5%
Number of Hedge Fund Holders: 13
PDF Solutions, Inc. (NASDAQ:PDFS) offers proprietary software and physical intellectual property products for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services. The company has been witnessing challenges in aligning customer data for AI applications, which might affect the adoption of their AI-related products. Furthermore, PDF Solutions, Inc. (NASDAQ:PDFS)’s several end-market segments have been struggling. For Q4 2024, it reported total revenues of $50.1 million, demonstrating an increase of 22% as compared to the same period last year.
For FY 2025, PDF Solutions, Inc. (NASDAQ:PDFS) remains optimistic, expecting a revenue growth rate approaching 15% YoY. The company remains focused on expanding its customer base and enhancing its product offerings to fuel further growth. With the growth in AI and high-performance computing applications, semiconductor companies have been investing in improving chip yields and manufacturing efficiency. PDF Solutions, Inc. (NASDAQ:PDFS)’s Exensio® Analytics Platform aids chipmakers in optimizing production, which results in reducing defects and improving performance.
Therefore, continued growth in the software industry, mainly in AI, cloud computing, and semiconductor manufacturing, drives demand for PDF Solutions, Inc. (NASDAQ:PDFS)’s data analytics and software tools.
8) PagSeguro Digital Ltd. (NYSE:PAGS)
% Decline Over Past 6 Months: ~43.4%
Average Upside Potential: ~67.3%
Number of Hedge Fund Holders: 25
PagSeguro Digital Ltd. (NYSE:PAGS) is engaged in the provision of financial and payment solutions for consumers, individual entrepreneurs, micro-merchants, and small and medium-sized companies. The company’s strong revenue growth in Q3 2024, together with healthy margins, reflects the effectiveness of PagSeguro Digital Ltd. (NYSE:PAGS)’s strategic investments in process optimization, innovation, and service quality. In Q3 2024, the company reported net revenues of R$4.8 billion, reflecting a growth of 20% YoY.
PagSeguro Digital Ltd. (NYSE:PAGS)’s stock appears to be well-placed to witness growth considering competitive advantages, like the integration of PIX into its platform, and a healthy growth in online banking. The company’s credit portfolio recorded strong growth in Q3 2024, rising 30% YoY to R$3.2 billion. Notably, low-risk, high-engagement products, such as credit cards, payroll loans, and FGTS anniversary withdrawal advances fueled this expansion. The growth was also aided by the resumption of credit lines, including working capital loans for SMEs and expanded credit card limits for low-risk borrowers. PagSeguro Digital Ltd. (NYSE:PAGS) continues to expect these as key drivers of future loan portfolio growth.
Overall, the growth in the broader software industry, primarily in fintech, offers a favourable environment for the company’s expansion. By aligning its services with evolving digital trends and using technological advancements, PagSeguro Digital Ltd. (NYSE:PAGS) is well-placed to capitalize on opportunities.
7) Rezolve AI Limited (NASDAQ:RZLV)
% Decline Over Past 6 Months: ~66.5%
Average Upside Potential: ~82.4%
Number of Hedge Fund Holders: 3
Rezolve AI Limited (NASDAQ:RZLV) offers AI solutions for commerce. The company’s platform empowers retailers, brands, and manufacturers to create dynamic connections with consumers transcending barriers of location and device. Maxim Group initiated coverage on the company’s stock with a “Buy” rating and a price target of $10.00. The firm lauded Rezolve AI Limited (NASDAQ:RZLV)’s status as an innovative technology platform, which is tailored for e-commerce providing scalable and personalized customer experiences. As a result of its unique technology and market knowledge, the company managed to enter significant partnerships with Microsoft and Google.
With continued expansion on the horizon and deepening collaborations with these tech giants, the company remains well-placed to redefine retail engagement globally in 2025 and beyond. Furthermore, Rezolve AI Limited (NASDAQ:RZLV) has confirmed that it is acquiring GroupBy in an all-equity transaction with a $55 million enterprise value. After the close, there will be an addition of a high-growth, revenue-generating business to its expanding AI commerce platform. Notably, the deal is expected to bring ~$30 million in expected high-margin revenue for 2025, further cementing Rezolve AI Limited (NASDAQ:RZLV)’s position as a leader in AI-driven commerce solutions.
6) Blaize Holdings, Inc. (NASDAQ:BZAI)
% Decline Over Past 6 Months: ~57.1%
Average Upside Potential: ~109.2%
Number of Hedge Fund Holders: N/A
Blaize Holdings, Inc. (NASDAQ:BZAI) offers artificial intelligence (AI)-enabled edge computing solutions. DA Davidson analyst Gil Luria initiated coverage of the company’s shares with a “Buy” rating and a price objective of $10. As per the analyst, the increased decentralization of AI systems continues to stem from the need to process data closer to its source. Therefore, the analyst believes that Blaize Holdings, Inc. (NASDAQ:BZAI)’s solutions integrating hardware and software to enable on-device inference place it well to become a critical player in AI-enabled edge computing.
Blaize Holdings, Inc. (NASDAQ:BZAI) remains well-placed to capitalize on the rapid demand for edge AI. Its value proposition and solutions roadmap cater to high-performance compute demands for defense, smart city, and automotive customers, which led to the growing customer pipeline. For FY 2025, the company expects revenue of $19 million – $50 million, and for FY 2026, Blaize Holdings, Inc. (NASDAQ:BZAI) expects revenue between $105 million – $140 million, as solutions begin to get deployed.
The increase in AI workloads in industries such as automotive, retail, industrial automation, and healthcare results in a strong demand for efficient edge AI processing. Blaize Holdings, Inc. (NASDAQ:BZAI)’s Graph Streaming Processor architecture has been designed for low-power, high-performance AI inference, which makes it suitable for AI-driven software applications.
5) Silvaco Group, Inc. (NASDAQ:SVCO)
% Decline Over Past 6 Months: ~56.2%
Average Upside Potential: ~124.1%
Number of Hedge Fund Holders: 12
Silvaco Group, Inc. (NASDAQ:SVCO) offers technology computer-aided design (TCAD) software, electronic design automation (EDA) software, and semiconductor intellectual property (SIP) solutions. Krish Sankar from TD Cowen maintained a “Buy” rating on the company’s stock, providing a price target of $15.00. The analyst’s rating was backed by a combination of factors influencing Silvaco Group, Inc. (NASDAQ:SVCO)’s financial outlook. As per the analyst, the company has demonstrated promising signs with a rise in bookings, hinting at a positive growth trajectory.
The company has managed to expand its customer base, adding fresh clients which contributes to a strong increase in bookings. Moving forward, the analyst expects continued revenue growth in 2025, courtesy of strategic orders. Silvaco Group, Inc. (NASDAQ:SVCO) closed 2024 with strong results for bookings and revenue, fueled by sustained demand for its digital twin modeling platform and growth in key semiconductor markets.
Silvaco Group, Inc. (NASDAQ:SVCO) also announced a partnership with Micon Global to expand its reach across the EMEA market, leveraging Micon’s expertise to deliver cutting-edge TCAD, EDA, and SIP solutions. With the growth of AI, 5G, automotive, and IoT applications, there is a need for power-efficient semiconductor designs. Silvaco Group, Inc. (NASDAQ:SVCO)’s EDA tools and TCAD solutions support chipmakers in developing and optimizing next-gen chips.
4) Paysign, Inc. (NASDAQ:PAYS)
% Decline Over Past 6 Months: ~36.8%
Average Upside Potential: ~134.9%
Number of Hedge Fund Holders: 9
Paysign, Inc. (NASDAQ:PAYS) offers prepaid card programs, comprehensive patient affordability offerings, digital banking services, and integrated payment processing services. The company announced its annual performance analysis of pharmaceutical copay programs leveraging patient affordability solutions. Paysign, Inc. (NASDAQ:PAYS)’s dynamic business rules feature, focused on mitigating the harmful financial impact of copay maximizers on patients and pharmaceutical program sponsors, saved their clients over $100 million in 2024 alone.
Because of its ability to identify impacted claims on the first fill with 97% accuracy, the technology happens to be an industry-first and unique in the marketplace. Paysign, Inc. (NASDAQ:PAYS) expects growth in its higher-margin patient affordability programs to continue, aiding its gross margins. Furthermore, Paysign, Inc. (NASDAQ:PAYS)’s patient affordability pipeline is highly robust as it continues to add new customers, new programs, and maintain strong relationships with the leading pharmaceutical companies, further strengthening their confidence in its offerings.
Paysign, Inc. (NASDAQ:PAYS) remains focused on identifying and leveraging additional high-growth opportunities in the payments sector to expand its current product portfolio. With businesses and consumers rapidly adopting digital payment methods, the requirement for innovative prepaid programs and integrated payment processing services has increased. Therefore, Paysign, Inc. (NASDAQ:PAYS)’s expertise in such areas places it well to capitalize on this trend. Overall, the growth in the broader software industry, mainly in healthcare and fintech technology, provides a favourable environment for the company.
3) Intelligent Protection Management Corp. (NASDAQ:IPM)
% Decline Over Past 6 Months: ~46.1%
Average Upside Potential: ~179.0%
Number of Hedge Fund Holders: N/A
Intelligent Protection Management Corp. (NASDAQ:IPM) is a managed technology solutions provider, which provides cybersecurity and cloud infrastructure solutions. Maxim analyst Allen Klee upped the company’s stock to “Buy” from “Hold” with a price objective of $6. Intelligent Protection Management Corp. (NASDAQ:IPM)’s acquisition of Newtek Technology Solutions and sale of Paltalk, Camfrog, and Tinychat businesses pivots the focus to the strong end markets of outsourced IT hosting for the cloud, disaster recovery, cybersecurity, and procurement, opines Klee.
Furthermore, the analyst believes that the settlement of its patent infringement award can also offer additional capital, thereby increasing the enterprise value estimate. Maxim does not anticipate that Intelligent Protection Management Corp. (NASDAQ:IPM) will need to garner capital to finance its operations. Moving forward, the company plans to continue its efforts to improve the user experience with its ManyCam software and optimize features for consumer and enterprise applications.
There has been an acceleration in the shift to cloud infrastructure by businesses. With Intelligent Protection Management Corp. (NASDAQ:IPM) providing server hosting, cloud storage, and disaster recovery solutions, it can capture a higher market share as businesses continue to transition from on-premise solutions to cloud. Therefore, with the continuous growth in cybersecurity, cloud computing, and managed IT services, Intelligent Protection Management Corp. (NASDAQ:IPM) remains well-placed to scale the business.
2) CXApp Inc. (NASDAQ:CXAI)
% Decline Over Past 6 Months: ~33.8%
Average Upside Potential: ~211.5%
Number of Hedge Fund Holders: 6
CXApp Inc. (NASDAQ:CXAI) is a software business, which remains focused on AI-driven workplace solutions. In Q3 2024, the company witnessed 18% growth in recurring revenue and a net retention rate of 106%. During the quarter, CXApp Inc. (NASDAQ:CXAI) saw an increase in revenue to $1.9 million, fueled by a robust shift to subscriptions-based services.
Moving forward, CXApp Inc. (NASDAQ:CXAI)’s strong performance can be supported by its shift towards a subscription-based model and its focus on creating value through scalable, recurring revenue. Given that 88% of the company’s revenue is derived from subscriptions, CXApp Inc. (NASDAQ:CXAI) continues to position CXApp for consistent and sustainable growth, aligning with the clients’ dynamic needs. The company remains focused on strengthening its cloud partnerships as it has announced the availability of its flagship product, CXAI, and its generative AI-based analytics platform, CXAI VU, on AWS Marketplace.
Overall, the expansion of AI-driven SaaS, workplace automation, and hybrid work is expected to fuel demand for CXApp Inc. (NASDAQ:CXAI)’s smart workplace solutions. With software continuing to transform workplaces, the company is well-placed to capitalize on growth opportunities.
1) T Stamp Inc. (NASDAQ:IDAI)
% Decline Over Past 6 Months: ~56.21%
Average Upside Potential: ~319.7%
Number of Hedge Fund Holders: 3
T Stamp Inc. (NASDAQ:IDAI) is engaged in developing and marketing identity authentication software solutions for government and enterprise partners, and peer-to-peer markets. The company announced a strategic transaction with Qenta Inc. As per the arrangement, Qenta is spinning its Goldstar KYC technology off into a newly formed subsidiary, QID Technologies LLC, with T Stamp Inc. (NASDAQ:IDAI) having a 10% ownership interest in the new entity.
T Stamp Inc. (NASDAQ:IDAI) has offered a non-exclusive license of its AI-powered identity technologies to QID in return for a single $1 million license fee receivable in 3 installments over Q1 2025. QID is also contracting with the company for business development, product development, and product operations for identity and privacy services and solutions in return for monthly service fees starting January 1 and capped at $3.6 million annually. With T Stamp Inc. (NASDAQ:IDAI) a 10% equity holder in QID, the expected $3.6 million in billed revenue will result in a net cash inflow of $3.3 million.
From T Stamp Inc. (NASDAQ:IDAI)’s viewpoint, the transaction remains immediately accretive as it was able to restructure and reallocate existing resources to service this new revenue stream without witnessing additional expenses. Therefore, overall growth in the software industry, mainly in AI and cybersecurity, offers a favourable environment for the company’s expansion.
While we acknowledge the potential of IDAI as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than IDAI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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