The death of software has been greatly exaggerated.
“If AI is going to kill a business, the signs would already be there,” D.A. Davidson analyst Gil Luria said in a research note, observing the industry is now in its third year of the AI shift.
The biggest impact on the software industry thus far has been “narrative and scared customers unwilling to commit,” he added. The latter may be a factor that’s starting to change, as companies come to realize “neither they nor their software vendors have been run over” by AI.
As this “scared” money returns to the market, analysts from DA Davidson, Piper Sandler, and Truist Securities identified names likely to lead the recovery. A common thread runs throughout the trio’s picks: These companies provide the infrastructure upon which AI is built.
D.A. Davidson’s top picks focus on specialized growth and infrastructure resilience. Luria’s pick for 2026 is Commvault (CVLT), where he sees a massive 50%+ upside 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 business is a “subscription acceleration story” with an ROIC north of 100% and price target of $250. Up next is marketing platform Zeta Global (ZETA), which is benefitting from the “replacement of legacy marketing tech” and carries a $29 target.
Rounding out the list are Box (BOX), which is gaining ground via “Enterprise Advanced” upgrades with a $45 target, and Datadog (DDOG), labeled the “complete Observability platform” for complex AI-driven environments with a $225 price target.
Parallel to Luria’s list, Piper Sandler analyst James Fish is looking toward the “Gen Z” winners and infrastructure plays. Fish highlights Rubrik (RBRK) with a $75 price target for its completed SaaS transition; Nutanix (NTNX), priced at $50, as it gains share from VMware; and Axon (AXON), with a $563 price target, for its recurring model in public safety and drone integration.
Meanwhile, Truist Securities analyst Terry Tillman writes that software skepticism often centers on “seat and license-based pricing” — the idea that if AI makes humans more efficient, companies will buy fewer software licenses. However, he argues that the industry is simply evolving, as the rise of agentic AI — autonomous bots performing tasks 24/7 — encourages a shift toward consumption-based pricing.
“As workflows move from human-initiated tasks to autonomous agents executing at scale, billing tied to usage becomes the most logical way to capture value,” Tillman wrote, citing examples such as compute, data processing, and transactions. Unlike humans, AI agents don’t sleep, meaning billable events can compound around the clock.
