Wedbush (IVES) said Microsoft (MSFT), Palantir Technologies (PLTR), CrowdStrike (CRWD), Snowflake (SNOW) and Salesforce (CRM) are the five software stocks to own amid what it calls the “software apocalypse.”
“We believe the market is baking in a doomsday scenario for software companies in the near-term, which we believe is extremely overblown, as many customers won’t be willing to put their data at risk to capitalize on AI implementation strategies until there is less risk with these migration projects. Is AI a headwind in the near-term for software? YES!…however, the magnitude of this software sell-off is a major head scratcher and is factoring in an Armageddon scenario for the sector that is far from reality in our view,” said analysts led by Dan Ives.
The analysts noted that they understand the concerns surrounding the software landscape and believe the AI risks to current enterprise software budgets are overblown. The analysts think that enterprises will not completely overhaul tens of billions of dollars of prior software infrastructureinvestments to migrate over to Anthropic (ANTHRO), OpenAI (OPENAI), and others.
The analysts said that large enterprise installed bases have taken many decades to accumulate, and trillions of data points are now ingrained in software infrastructure company ecosystems. They added that new players like OpenAI and Anthropic don’t have the current capacity to hold all enterprise data to power AI integrations and protect organizational data structures from malware.
“While the software complex has become a “Do Not Enter” zone over the past month, we believe there are winners and opportunities in the software space. These are the Top 5 Software Names that we believe are the top names to own in this software apocalypse: MSFT, PLTR, CRWD, SNOW, CRM,” said Ives and his team.
The analysts noted that we are currently in a historic sell-off in software due to rising fears that AI will continue to erode market share from major players The IGV index is down about 18% year-to-date versus the S&P 500 being roughly flat YTD, wiping out more than $300B in overall market value as the market continues to price in a worst-case scenario for the software complex, the analysts added.
One of the largest concerns is that AI will continue to take more share of seat-based models following the recent updates from Anthropic where it released a slew of new AI tools designed to automate high-value work, the analysts noted. This work included legal, sales, and marketing among other things, and created a panic moment across the software complex as more investors feared that the normal software as a service, or SaaS, models would come under fire.
AI assistant OpenClaw poses another risk to enterprise software companies looking to integrate AI across products, as this product runs directly across operating systems and applications to automate real world tasks, according to the analysts.
The analysts added that another major theme driving the software sector down so far is budget reallocation towards AI players and away from standalone software vendors. With about 80% of CIOs focused on implementing AI and machine learning, or ML, capabilities across organizations, there is growing speculation that enterprise software budgets have started to shift towards AI initiatives, cannibalizing the spend left for software advancements, according to the analysts.
Microsoft (MSFT)
Wedbush maintained its Outperform rating and $575 price target on Microsoft’s stock.
“We believe that Microsoft is on its way to accelerating cloud and AI monetization, which is going to comprise a bigger piece of Redmond going forward and will ultimately spur growth and margins over the coming years. While Anthropic has seen significant advancements in model performance and integrations, MSFT is installing these capabilities across its massive enterprise install base within its 365 ecosystems looking for a trusted distribution of new AI systems, with many enterprises still in the early stages of embedding AI into their data across the MSFT tech stack,” said Ives and his team.
The analysts believe that the Street continues to underestimate the Azure growth story moving forward, with 2026 set to be an inflection year, and it remains one of the core winners in the AI Revolution.
Palantir Technologies (PLTR),
The firm kept its Outperform rating and $230 price target on Palantir’s stock.
The analysts said that despite the market grouping Palantir’s along with the rest of software/generic AI or analytics vendors in this software sell-off, the company continues to see unprecedented demand for its Artificial Intelligence Platform, or AIP, especially across the commercial and federal landscapes, by taking AI solutions that solve mission-critical use cases at enterprise scale with shorter sales cycles, expanding deal sizes, faster deployment/Return on investment, or ROI, timelines.
“As enterprises move from AI experimentation to production, Palantir’s value proposition becomes more relevant, not less as AI demand is leading to new uses where speed-to-deployment and outcome-driven ROI matter more than model performance,” said Ives and his team.
Snowflake (SNOW)
Wedbush maintained its Outperform rating and $270 price target on the stock.
The analysts noted that one of the misconceptions in this sell-off is that enterprises are going to bypass software platforms and connect frontier models directly in the data, but enterprises require security, access controls, lineage, and governance before AI interacts/connects with production systems.
“This positions SNOW as the trusted layer between enterprise data and external models like Anthropic, further reinforcing SNOW’S position as an AI winner moving forward,” said Ives and his team.
Salesforce (CRM)
The firm kept its Outperform rating and $375 price target on the stock.
The analysts believe that Salesforce is still a long-term winner of the AI Revolution despite the company finding itself in the epicenter of the software sell-off, as they think the market is overlooking key details about Salesforce’s differentiated position against the negative overhang.
“The company’s moat continues to be the massive pool of data it has collected over the decades that’s sticky and difficult to replace, which is now being leveraged by Agentforce and the recent Informatica acquisition to provide the rich, trusted context AI agents need to function effectively,” added Ives and is team.
CrowdStrike (CRWD)
Wedbush maintained its Outperform rating and $600 price target on the stock.
“Crowdstrike’s role is industry agnostic in the sense that AI is disrupting the entire playing field, but the need to secure workloads and operations from AI continues to be essential, especially as usage is set to significantly increase,” said the analysts.
Ives and his team noted that Crowdstrike’s differentiated agentic Security Operations Center, or SOC, orchestration driven by Charlotte AI operates across domains, identities, and endpoints to fight fire with fire by allowing enterprises to secure their domain with AI as the company becomes the cybersecurity operating system of the AI era.
“We believe that CRWD’s position as the gold standard of cybersecurity remains firmly unchanged in the face of this Software Armageddon with the company’s innovative, best-in-class Falcon platform becoming increasingly effective in the modern threat landscape as AI adversaries become an incrementally larger threat,” said Ives and his team.