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The death of software has been greatly exaggerated.
“If AI were to kill a business, the signs would already be there,” Gil Luria, an analyst at DA Davidson, said in a research note, observing that the industry is now in its third year of transitioning to AI.
The biggest impact on the software industry so far has been “the narrative and scared customers who don’t want to engage,” he added. This last point could be a factor that begins to change, as companies realize that “neither they nor their software vendors have been crushed” by AI.
As this “scared” money returns to the market, analysts at DA Davidson, Piper Sandler and Truist Securities have identified names likely to lead the rally. A common thread runs through the trio’s choices: These companies provide the infrastructure on which AI is built.
DA Davidson’s top picks focus on specialized growth and infrastructure resilience. Luria’s pick for 2026 is Commvault (CVLT), where he sees a massive upside of over 50% and a $220 price target driven by sustained momentum and a rebound in margins.
Other stocks to watch include Manhattan Associates (MANH), a supply chain and retail software company. The company is a “subscription acceleration story” with over 100% ROI and a price target of $250. The next step is the Zeta Global marketing platform (ZETA), which benefits from “replacing existing marketing technologies” and has a target of $29.
The list is completed by Box (BOX), which is gaining ground via the “Enterprise Advanced” developments with a target of $45, and Datadog (Dog), described as a “complete observability platform” for complex AI-driven environments, with a price target of $225.
Along with Luria’s list, Piper Sandler analyst James Fish turns his attention to “Generation Z” winners and infrastructure projects. Highlights of Rubrik fish (RBRK) with a price target of $75 for its completed SaaS transition; Nutanix (NTNX), at a price of $50, because it gains shares from VMware; and Axon (AXONE), with a price target of $563, for its recurring model in public safety and drone integration.
Meanwhile, Terry Tillman, an analyst at Truist Securities, writes that skepticism about software often focuses on “seat-based and license-based pricing” — the idea that if AI makes humans more efficient, companies will buy fewer software licenses. However, he argues that the sector is simply evolving, as the rise of agentic AI – autonomous robots performing tasks 24/7 – encourages a move towards consumption-based pricing.
“As workflows move from human-initiated tasks to autonomous agents executing at scale, usage-based billing becomes the most logical way to capture value,” Tillman wrote, citing examples such as computing, data processing and transactions. Unlike humans, AI agents don’t sleep, meaning chargeable events can escalate around the clock.
