Gartner projects that global software spending will rise by 14.2% in 2025 to $1.25 trillion, making it one of the fastest-growing segments in technology, second only to the data center sector’s expected 23.2% growth. This surge highlights the software market’s crucial role in driving innovation and operational efficiency across industries. The sector’s sustained expansion is largely fuelled by the rapid adoption of artificial intelligence (AI) and other advanced technologies, which are reshaping business operations and unlocking new investment opportunities.
Over the past 15 years, a significant factor behind this growth has been the widespread transition to cloud computing and Software-as-a-Service (SaaS) models. These advancements have made software more accessible, scalable, and cost-effective, further accelerating its adoption across industries. As the software market continues to evolve, it remains at the forefront of technological progress, offering lucrative opportunities for investors while shaping the digital transformation of multiple sectors.
According to Forrester’s February 11 report, “Global Tech Market Forecast”, global technology spending is expected to increase by 5.6% in 2025, reaching $4.9 trillion. This growth will be primarily driven by key areas such as cybersecurity, cloud computing, generative AI, and the expanding digital economy. Notably, financial services, government, and media will account for 46% of global tech spending in 2024. However, Forrester estimates that by 2029, 70% of all tech spending will be concentrated in software and IT services, reinforcing software’s growing dominance within the industry.
Further emphasizing this trend, The Business Research Company’s January 2025 report forecasts that the global software products market will expand from $1.8 trillion in 2024 to approximately $2.0 trillion in 2025, reflecting a compound annual growth rate (CAGR) of 11.7%. Looking further ahead, the market is projected to reach $3.0 trillion by 2029, maintaining a strong CAGR of 11.3%.
With software becoming increasingly integrated into daily life and business operations, demand is surging at a robust rate. As a result, the software market remains one of the most attractive investment opportunities, supported by continued technological advancements and a rapidly expanding digital economy.
A software engineer at a desk coding and debugging a software application.
Our Methodology
To identify the 10 worst-performing software stocks to buy according to analysts, we first screened all U.S.-listed software companies with a market capitalization above $300 million and a stock price over $10, excluding smaller and more volatile stocks. We then narrowed the selection to companies that had experienced a year-to-date (YTD) share price decline of at least 20%, further refining the list to include only those with a potential upside of 10% or more. Finally, we ranked the bottom 10 stocks based on YTD returns, placing the worst-performing stocks at the top. Additionally, we 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 28.
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 Worst Performing Software Stocks to Buy According to Analysts
10. Core Scientific Inc. (NASDAQ:CORZ)
YTD returns: -21%
Potential Upside: 70%
Number of Hedge Fund Holders: 66
Core Scientific Inc. (NASDAQ:CORZ) operates large-scale, purpose-built facilities dedicated to digital asset mining and stands as a key player in blockchain infrastructure, software solutions, and related services. The company leverages its extensive fleet of mining machines to generate bitcoin for its own portfolio while also offering hosting services to major bitcoin mining clients.
In 2025, Core Scientific’s stock has fallen 21% so far. On February 26, the stock dropped 17% after the company reported a Q4 2024 net loss of $267 million, a significant increase from the $195.7 million loss in the same quarter the previous year. The higher loss was mainly due to accounting adjustments on warrants and other financial instruments, which were affected by the rise in the company’s stock price. Revenue fell sharply to $94.9 million from $141.9 million, and the company posted a $39.8 million operating loss, compared to a $3.9 million operating profit in Q3 2023. The disappointing results led to a strong negative reaction from investors.
On a more positive note, Core Scientific Inc. (NASDAQ:CORZ) announced a significant $1.2 billion expansion agreement to provide data center capacity to CoreWeave. This deal is expected to elevate the company’s total projected revenue to $10.2 billion over a 12-year contract period.
Despite the weaker Q4 performance, analysts remain focused on Core Scientific Inc. (NASDAQ:CORZ)’s long-term growth potential. The company is well-positioned to capitalize on increasing demand for blockchain technology and the need for scalable, efficient mining solutions as the cryptocurrency market continues to evolve. While some analysts revised their price targets downward, the stock remains a consensus Buy with a price target of $19.
Following the earnings release, Craig-Hallum analyst George Sutton, who initially issued a Buy rating on the stock on January 21, reaffirmed his bullish stance with an unchanged price target of $24.
9. Teradata Corp. (NYSE:TDC)
YTD returns: -23%
Potential Upside: 22%
Number of Hedge Fund Holders: 26
Teradata Corp. (NYSE:TDC) is a company that helps businesses store, manage, and analyze their data. It specializes in hybrid cloud solutions through its Teradata Vantage platform, which combines data storage, big data analytics, and business tools. This allows companies to organize their data and gain valuable insights to improve decision-making.
On February 11, Teradata Corp. (NYSE:TDC) reported its Q4 2024 earnings, causing its stock to drop 20%, bringing its year-to-date decline to approximately 23%. The company posted an 11% year-over-year decline in Q4 revenue, while its total Annual Recurring Revenue (ARR) fell 6% to $1.47 billion. The 2025 outlook was also weak, with management expecting total revenue to decrease by 4%-6% year-over-year and ARR to grow between 0% to 2% YoY.
The weaker-than-anticipated results and guidance led multiple analysts to lower their price targets. Barclays analyst Raimo Lenschow reiterated his Sell rating and reduced his price target from $30 to $25. Meanwhile, a Guggenheim analyst maintained a Buy rating but adjusted his target price down from $42 to $37. Despite disappointment over missed financial targets and reduced guidance, the analyst noted that there was no clear indication of significant customer attrition to competitors. He also suggested that Teradata Corp. (NYSE:TDC) could be an attractive acquisition target if the market continues to undervalue its stock.
As of the market close on February 28, Teradata Corp. (NYSE:TDC) has a consensus potential upside of 22%.
8. SPS Commerce Inc. (NASDAQ:SPSC)
YTD returns: -28%
Potential Upside: 50%
Number of Hedge Fund Holders: 29
SPS Commerce Inc. (NASDAQ:SPSC) provides on-demand supply chain management solutions through an online hosted software suite. Eliminating the need for complex on-premise software, SPS Commerce’s online platform works smoothly with retail customers’ existing systems and makes it easier to track shipments, manage stock levels, and process orders without needing extra IT staff or expensive equipment.
SPS Commerce Inc. (NASDAQ:SPSC)’s share price performance in 2024 was lackluster as it fell 5% that year. The weak momentum spilled into 2025 as well and by February 10 the stock was down 4%. On February 10, the company announced its Q4 2024 results which were received with a negative response and subsequently the shares tanked 14% on February 11, leading to a YTD decline of 28%.
The primary reason for the decline was the company’s exposure to supply chain management, potential tariff and policy changes could have an impact on its growth trajectory and thus investors appear jittery, leading to share price volatility. Otherwise, SPS Commerce Inc. (NASDAQ:SPSC)’s quarterly results were healthy with 19% YoY revenue growth, and revenue and EPS both moderately above street expectations. Moreover, guidance was not bad either with revenue growth projected at 19%-20% in 2025.
After the results, analyst responses were mixed on the stock. Craig-Hallum analyst Anthony Stoss reaffirmed his Buy rating with a price target of $220, whereas Baird analyst Joe Vruwink lowered his price target to $175 from $188 and reiterated his Neutral rating. Consensus still appears optimistic with an average price target of $200, reflecting a 50% potential upside.
7. Manhattan Associates Inc. (NASDAQ:MANH)
YTD returns: -35%
Potential Upside: 53%
Number of Hedge Fund Holders: 34
Manhattan Associates Inc. (NASDAQ:MANH) specializes in providing software solutions that optimize supply chain management, inventory control, and omnichannel operations for retailers, wholesalers, manufacturers, logistics providers, and other businesses. The company delivers its Manhattan Active applications via the cloud as subscription-based software-as-a-service (SaaS).
On January 29, Manhattan Associates Inc. (NASDAQ:MANH) saw its share price decline by 24% following its Q4 2024 earnings call, during which management indicated potential short-term headwinds in services due to macroeconomic volatility. In Q4, the company reported a 7% year-over-year increase in total revenue, with Cloud revenue experiencing a robust 27% YoY surge, while Services revenue remained flat. For 2025, Manhattan Associates projects topline growth in the range of 2% to 3%.
Given the sharp decline in share price, the reaction appears somewhat unexpected given the company’s solid performance and optimistic guidance for 2025. However, investor concerns over short-to-medium-term growth prospects were likely the reason after management acknowledged that approximately 10% of its customers had scaled back planned services work for the coming year.
William Blair analyst Dylan Becker views this price drop as a buying opportunity for long-term investors. He remains optimistic about the company’s strong momentum in transitioning to a cloud-based model and expects continued execution of its growth strategy under the new CEO. On February 13, the analyst upgraded the stock from Market Perform to Outperform.
6. BILL Holdings Inc. (NYSE:BILL)
YTD returns: -35%
Potential Upside: 58%
Number of Hedge Fund Holders: 64
BILL Holdings Inc. (NYSE:BILL) provides AI-powered, cloud-based financial automation software designed to streamline, digitize, and automate back-office financial processes for small and mid-sized businesses.
The company’s stock tumbled 36% following its Q2 2025 earnings report (for the fiscal year ending in June). While total revenue for the quarter grew 14% year-over-year, Core revenue—which includes subscription and transaction fees—rose 16%. However, its Q3 2025 revenue forecast of $352.5-$357.5 million came in slightly below market expectations. Additionally, transaction monetization on its integrated platform declined slightly compared to the previous quarter, primarily due to seasonal fluctuations in total billings (TPB) and minimal volume growth, leading to investor concerns. As a result, the stock had a year-to-date decline of 35%.
Despite the weaker-than-expected 2025 outlook, analysts remain largely positive on the stock, though they have adjusted their price targets downward. A Jefferies analyst significantly cut his price target from $102 to $70 while maintaining a Buy rating. Similarly, Bank of America analyst Bradley Sills reaffirmed his Buy rating but lowered his target price to $92.
5. Agilysys Inc. (NASDAQ:AGYS)
YTD returns: -39%
Potential Upside: 61%
Number of Hedge Fund Holders: 20
Agilysys Inc. (NASDAQ:AGYS) is a leading provider of hospitality software solutions, serving hotels, resorts, casinos, restaurants, and other service-based businesses. The company specializes in property management systems (PMS), point-of-sale (POS) solutions, inventory and procurement management, and analytics software.
Agilysys Inc. (NASDAQ:AGYS)’s ability to deliver integrated solutions tailored to the hospitality industry has made it a preferred partner for high-end establishments looking to improve guest experiences and operational efficiency. However, in its Q3 2025 earnings report, the company highlighted ongoing challenges in product revenue, particularly in hardware sales. These issues stemmed from difficulties in its point-of-sale segment, mainly within managed food services, as the company undergoes a modernization transition. This slowdown in product revenue is expected to weigh on overall growth in 2025. The weak outlook triggered a negative market reaction, leading to a 20% drop in the stock on January 22, the day after the earnings announcement. Investor sentiment has remained weak since then, with the stock down 39% year-to-date.
Despite the disappointing results, analysts at Oppenheimer maintained their Outperform rating on Agilysys Inc. (NASDAQ:AGYS) but lowered their price target from $150 to $135. They remain optimistic due to the company’s strong subscription business, as well as management’s positive outlook on bookings, attach rates, and pipeline momentum.
4. Vertex Inc. (NASDAQ:VERX)
YTD returns: -39%
Potential Upside: 49%
Number of Hedge Fund Holders: 23
Vertex Inc. (NASDAQ:VERX) provides tax technology solutions, offering software and services that help businesses navigate complex indirect tax requirements. The company specializes in sales tax, value-added tax (VAT), and global tax compliance, serving enterprises across industries such as retail, manufacturing, and e-commerce.
After an impressive 98% rally in 2024, Vertex Inc. (NASDAQ:VERX) continued to perform well in early 2025, gaining 5% by February 10. However, the stock has since plunged more than 42%, in just 13 days. Analysts attribute this decline to the stock entering 2025 with a high valuation after a strong run, making it vulnerable to a pullback. Rising competition, market volatility, and weaker-than-expected organic growth in its Q4 2024 results have further contributed to the correction, leaving the stock down 39% year-to-date.
BMO Capital analyst Daniel Jester pointed out that while Q4 results were mixed, the company’s 2025 annual recurring revenue (ARR) growth target suggests challenging near-term goals. He reiterated a Market Perform rating and slashed his price target from $56 to $41. Meanwhile, Morgan Stanley analyst Chris Quintero maintained a Buy rating with a $57 price target, signaling confidence in the stock’s long-term prospects. The consensus price target stands at $48, indicating a potential upside of 49%.
3. The Trade Desk Inc. (NASDAQ:TTD)
YTD returns: -40%
Potential Upside: 64%
Number of Hedge Fund Holders: 63
The Trade Desk Inc. (NASDAQ:TTD) operates a cloud-based ad-buying platform that enables advertisers to plan, manage, optimize, and measure digital marketing campaigns across multiple channels, including video, display, audio, digital-out-of-home, and social media. The company serves advertising agencies, advertisers, and other service providers within the ad industry.
Like many other stocks, The Trade Desk Inc. (NASDAQ:TTD) faced a steep decline after its quarterly earnings report on February 12, with shares plunging 33% in a single day. The company reported Q4 2024 revenue of $741 million, reflecting 22% year-over-year growth but falling short of its guidance of at least $756 million. Management expressed disappointment over execution missteps that led to the shortfall. For Q1 2025, the company projected 17% revenue growth, signaling a slowdown compared to 22% in the previous quarter and 28% in Q1 2023. As of February 28, the stock had declined 40% year-to-date.
Despite recent challenges, The Trade Desk Inc. (NASDAQ:TTD) remains well-positioned to benefit from the ongoing shift toward digital advertising, as brands continue reallocating budgets away from traditional media. On February 20, Loop Capital analyst Rob Sanderson cut his price target from $145 to $101, citing weak Q4 results and the stock’s valuation reset. However, he maintained his Buy rating, believing the company’s long-term growth story remains intact and that its current estimates may prove conservative.
2. Flywire Corp. (NASDAQ:FLYW)
YTD returns: -45%
Potential Upside: 45%
Number of Hedge Fund Holders: 34
Flywire Corp. (NASDAQ:FLYW) is a global payments enablement and software company that provides specialized payment solutions for the education, healthcare, travel, and B2B sectors. The company facilitates secure, efficient, and seamless cross-border and domestic transactions, helping organizations manage payments more effectively.
Flywire Corp. (NASDAQ:FLYW) shares have dropped 45% year-to-date. The stock had underperformed in 2024, declining 11%, and was already down 14% in 2025 before its Q4 2024 earnings release. Following weaker-than-expected results and subdued guidance, the stock plunged 37% on February 26. For Q1 2025, the company projected revenue growth of 10-13% on a constant-currency basis, indicating a slowdown from the 17% and 27% year-over-year growth seen in Q4 and Q3 2024, respectively.
To improve profitability and efficiency, Flywire has launched a restructuring plan affecting approximately 10% of its workforce. Additionally, the company’s $330 million acquisition of Sertifi (a private company) is expected to accelerate the growth of its expanding Travel vertical and support future expansion. The consensus price target for Flywire Corp. (NASDAQ:FLYW) currently stands at $16.5, suggesting a potential upside of 45%.
1. Ibotta Inc. (NYSE:IBTA)
YTD returns: -49%
Potential Upside: 62%
Number of Hedge Fund Holders: 15
Ibotta Inc. (NYSE:IBTA) is a consumer e-commerce technology firm that focuses on offering cashback and digital rewards for everyday purchases. Utilizing its mobile app and browser extension, the company partners with retailers, brands, and e-commerce platforms to provide cashback deals on a variety of items such as groceries, apparel, electronics, and more.
On Thursday, February 27, Ibotta Inc. (NYSE:IBTA) saw its shares drop sharply by 46%, which contributed to a year-to-date decline of 49%, primarily due to disappointing quarterly performance. In Q4 2024, the company reported total revenue of $98.4 million, a 1% decrease year-over-year and below its own guidance of $100–$106 million. Additionally, adjusted EBITDA came in at $27.8 million, falling short of its guided range of $30–$34 million.
The guidance for Q1 2025 raised further concerns. The company expects revenue to be between $80 and $84 million, indicating no growth compared to Q3 2023 figures, at the mid-point of the range. Moreover, the projected EBITDA margin is just 15%, a significant drop from its usual 28%–30%, which implies that costs are rising faster than revenue. Management also pointed to near-term supply constraints—specifically, a shortage of available offers for redeemers—that could negatively impact revenue. Consequently, the focus is now on reducing costs and enhancing sales execution to rekindle growth.
In light of these results, analysts have revised their earnings estimates and lowered their price targets on Ibotta Inc. (NYSE:IBTA). However, the consensus one-year median price target still suggests a potential upside of 62% from current levels. For instance, an analyst at Evercore ISI reduced his price target from $97 to $56 while maintaining an Outperform rating.
While we acknowledge the potential of IBTA 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 IBTA 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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