Software stocks have bounced back from their year-to-date lows, buoyed by several strong earnings reports from companies like Salesforce (NYSE:CRM) and Atlassian (NASDAQ:TEAM). These results have reassured investors that software companies are still growing and increasingly view AI as a catalyst rather than a threat to their business models.
This article looks at some of the top software stocks to watch this week, including Palo Alto Networks (NASDAQ:PANW), Snowflake (NASDAQ:SNOW), and DocuSign (NASDAQ:DOCU).
Palo Alto Networks
Palo Alto Networks stock has been in a strong bull run this year, moving from a low of $139 in February to a record high of $398. This surge happened as investors predicted that demand for cybersecurity solutions will soar in the new era of AI agents.
Top cybersecurity companies like Rubrik and CrowdStrike published strong numbers last week and hinted that they were seeing elevated demand from top organizations.
Analysts expect the upcoming results to show that its revenue jumped by 32% last quarter to $3.35 billion. This growth will partly be because of CyberArk, the company it acquired in a $25 billion deal.
Benzinga data shows that analysts have a bullish outlook for the stock. However, the consensus price target of $355 is about 4.5% lower than the current level.
Snowflake
Snowflake, a top data warehousing company, is another top software player to watch this week. Its results will come as the stock trades at $328, up by 172% from its lowest level this year, with its market capitalization hitting $113 billion.
Snowflake’s growth has soared, helped by its long-term relationships with companies like Capital One, JPMorgan Chase, Cisco, Aetna, and Pfizer. Its recent results showed that its customers jumped to 13,912 from 11,411 in the same period last year.
Its revenue jumped by 34% to over $1.334 billion in the first quarter. Benzinga data shows that analysts predict that its revenue jumped by 30% in Q2 to $1.48 billion. The options market is predicting more volatility, with the implied volatility rising to 121%, higher than the historical volatility of just 35%.
DocuSign
DocuSign is another top software company to watch as it releases its financial results on Thursday. These numbers come as the stock has jumped by 60% from its lowest level this year.
Like Snowflake, the company has an elevated implied volatility, which has soared to 105%. The options market suggest that it will experience a 10% move in either direction after earnings.
The average estimate is that DocuSign’s revenue rose by 8.3% in the second quarter to $867 million. This growth, while modest, is a sign that the company is doing relatively well considering that competition in the sector has jumped. It is benefiting from its Intelligent Agreement Management (IAM) solution.
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