In 2026, US software stocks will make a comeback! Barclays supports: AI monetization assists in valuation reshaping, preferential selection of Salesforce, Oracle, DigitalOcean.

Barclays emphasized its positive outlook on the 2026 US software stock market and adjusted the ratings and target prices of multiple software stocks it covers. Barclays analysts, led by Raimo Lenschow, stated: "We believe that the prospects for software stocks in 2026 are favorable. The macroeconomic environment and IT spending are stable, valuations are low, and this sector is currently not favored by the market." The analysts added that this year is expected to see significant revenue contributions from the application of artificial intelligence (AI) in software companies such as Salesforce, Inc. and infrastructure software companies such as Oracle Corporation, which will change market sentiment. The analysts pointed out that in 2025, US software stocks underperformed the broader market, with the IGV software index rising 6% compared to the S&P 500 index's 16% increase. Actual performance of related software stocks was actually quite robust, but various debates surrounding AI continued to put pressure on valuation multiples. Raimo Lenschow and his team stated: "We believe that this situation will change in 2026. We see application software companies gaining growth support as they start to benefit from easier comparables (finally moving away from the headwinds of the pandemic bubble period), and well-positioned vendors will begin to generate real revenue from AI intelligence bodies. For companies in the infrastructure/compute sector, we see a large amount of remaining performance obligations (RPO) from 2025 starting to convert into revenue in 2026, which will make people's excitement about AI more tangible." The Barclays analyst team highlighted Salesforce, Inc. (CRM.US), Oracle Corporation (ORCL.US), and DigitalOcean (DOCN.US) as their top picks for the year. The firm upgraded Descartes Systems Group Inc. (DSGX.US) rating, while downgrading the ratings of Snowflake (SNOW.US), DoubleVerify (DV.US), and GitLab (GTLB.US). The analysts also emphasized the reasons for adjusting the ratings of these software stocks. Descartes Systems Group Inc. Barclays upgraded Descartes Systems Group Inc.'s rating from "hold" to "buy" and raised its target price from $106 to $105. The analysts believed that the company's latest fiscal year 2026 Q3 performance marked a positive turning point, which the market had underestimated given its recent performance (21% decrease in stock price last year compared to 8% increase in the IGV index). The analysts stated, "In our view, the company's most challenging period is behind it, with organic growth rates accelerating from multi-year lows set in the first half of fiscal year 2026 due to some tariff-related impacts. We see its continued execution and easier comparables in the first half of fiscal year 2027 supporting a stabilization or slight improvement in its underlying growth rate, and the company continues to have space for non-organic growth through small bolt-on acquisitions. The current market environment and recent comments from management suggest a favorable M&A environment for the company." The analysts noted that while they believed Descartes Systems Group Inc. was emerging from the peak uncertainty of the macroeconomic environment, they emphasized that in the long term, the constantly changing regulations and requirements leading to supply chain and logistics complexity added value to the company's proposition. Furthermore, the analysts believed the company had done a good job in continuing to build its platform, differentiating itself further from competitive point solutions, enhancing the network effects of the Descartes Systems Group Inc. platform, especially in the background of emerging AI applications and new use cases in the supply chain management and logistics software space. The analysts stated, "Therefore, we see the potential for Descartes Systems Group Inc. to outperform the market in the 2026 calendar year." Snowflake Barclays downgraded Snowflake's rating from "buy" to "hold" and lowered its target price from $290 to $250. The analysts stated, "We still believe Snowflake is a top-notch software asset, boasting one of the strongest revenue growth rates within our coverage (at a suitable scale) and above-average free cash flow profitability. However, after a strong performance in 2025, we believe its future upside is limited." Data showed that Snowflake's stock price rose over 42% in 2025. DoubleVerify Barclays downgraded DoubleVerify's rating from "buy" to "hold" with the target price remaining at $12. The analysts stated, "Over the past year, DoubleVerify's performance has significantly lagged behind the overall software industry (down 40% in stock price in 2025, while the IGV index rose 6%). Despite seeing strong revenue growth in the first half of 2025, a subsequent decline in growth in the third quarter raised questions in the market about the sustainability of the business's growth sources." The analysts believed that DoubleVerify's current valuation was cheap, but they did not see any short-term catalysts to drive the stock price up, with its Activation business facing more difficult comparables in the first half of 2026 and new products only expected to have a positive impact on performance in the second half of 2026. GitLab Barclays downgraded GitLab's rating from "hold" to "sell" and lowered its target price from $42 to $34. The analysts stated that GitLab's stock price had been under pressure (down 33% in 2025) due to execution missteps, challenging macro environment making it difficult to acquire new customers (especially small and medium enterprises), intensified competition, and ongoing management changes (which were expected to slow the company's pace of innovation). The analysts stated, "Over the past few months, the company has made adjustments to 'correct its course,' announcing a series of changes in marketing strategies (including refocusing on net new customer acquisition), integration with leading open source code generation tools (such as Claude Code, Amazon Q, Gemini, etc.), and increasing the size and quota representation of its sales team." "However, we have decided to downgrade the rating based on the view that these changes will take time to take effect, and GitLab will face tough comparables from the price increase of its Premium subscription services in the first half of 2027 (management has indicated that this contributed about 10% of net new revenue in fiscal year 2026)." Overall, the analysts expected GitLab to perform relatively poorly throughout the year and therefore downgraded the stock to "sell."