The death of software has been greatly exaggerated.
“If AI is going to kill a business, the signs would already be there,” DA Davidson analyst Gil Luria said in a research note, noting that the industry is now in its third year of the shift to AI.
The biggest impact on the software industry so far has been “the narrative and scared customers who aren’t willing to commit,” he added. The latter may be a factor that is starting to change, as companies realize that “neither they nor their software providers have been run over” by AI.
As this “scared” money returns to the market, analysts at DA Davidson, Piper Sandler and Truist Securities identified names that would likely lead the rally. A common thread runs through all of the trio’s picks: These companies provide the infrastructure on which the AI is built.
DA Davidson’s key options focus on specialized growth and infrastructure resilience. Luria’s pick for 2026 is Commvault (CVLT), where he sees a huge 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 retail and supply chain software company. The business is a “subscription acceleration story” with an ROIC of over 100% and a price target of $250. Next up is marketing platform Zeta Global (ZETA), which is benefiting from “replacing legacy marketing technology” and has a target of $29.
Rounding out the list are Box (BOX), which is gaining traction via “Enterprise Advanced” upgrades with a $45 target, and Datadog (DDOG), dubbed a “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 “Generation 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 against VMware; and Axon (AXON), 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 centers on “seat- and license-based pricing” — the idea that if AI makes humans more efficient, companies will buy fewer software licenses. However, he maintains that the industry is simply evolving, as the rise of agent AI (autonomous bots that perform tasks 24/7) encourages a shift toward consumption-based pricing.
“As workflows shift from human-initiated tasks to autonomous agents running at scale, usage-linked 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 billable events can escalate 24 hours a day.