From commerce to culture, software is digitizing every aspect of our lives. Companies bringing it to life have been rewarded with high valuation multiples that make fundraising easier, but they have capped returns lately as the industry’s six-month gain of 15.3% has trailed the S&P 500’s 22.9%.
A cautious approach is imperative when dabbling in these businesses as the best will deliver robust earnings growth while the rest will be disrupted by competition and AI. With that said, here is one resilient software stock at the top of our wish list and two we’re swiping left on.
Two Software Stocks to Sell:
Akamai Technologies (AKAM)
Market Cap: $10.7 billion
With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ: AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.
Why Do We Think AKAM Will Underperform?
- 5.6% annual revenue growth over the last two years was slower than its software peers
- Bad unit economics and steep infrastructure costs are reflected in its gross margin of 59.1%, one of the worst among software companies
- Long payback periods on sales and marketing expenses limit customer growth and signal the company operates in a highly competitive environment
At $74.50 per share, Akamai Technologies trades at 2.5x forward price-to-sales. Read our free research report to see why you should think twice about including AKAM in your portfolio.
Procore Technologies (PCOR)
Market Cap: $11.04 billion
With a mission to build software for the people that build the world, Procore Technologies (NYSE: PCOR) provides cloud-based software that enables owners, contractors, and other stakeholders to collaborate and manage construction projects from any device.
Why Are We Cautious About PCOR?
- Products, pricing, or go-to-market strategy may need some adjustments as its 13.7% average billings growth over the last year was weak
- Operating margin declined by 2.3 percentage points over the last year as it scaled
- Low free cash flow margin of 6.5% for the last year gives it little breathing room, constraining its ability to self-fund growth or return capital to shareholders
Procore Technologies’s stock price of $73.49 implies a valuation ratio of 8x forward price-to-sales. Check out our free in-depth research report to learn more about why PCOR doesn’t pass our bar.
One Software Stock to Buy:
monday.com (MNDY)
Market Cap: $10.12 billion
With its colorful interface of boards, columns, and automation that replaced the chaos of spreadsheets, monday.com (NASDAQ: MNDY) is a cloud-based work operating system that helps teams manage projects, track tasks, and streamline workflows through customizable interfaces.
Why Are We Backing MNDY?
- ARR trends over the last year show it’s maintaining a steady flow of long-term contracts that contribute positively to its revenue predictability
- Market share will likely rise over the next 12 months as its expected revenue growth of 23.6% is robust
- Superior software functionality and low servicing costs result in a best-in-class gross margin of 89.4%
monday.com is trading at $196.99 per share, or 7.7x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
High-Quality Stocks for All Market Conditions
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
