SA Asks: What's the most attractive software stock right now?

What's the most attractive software stock right now for investors?

Seeking Alpha analysts Oakoff Investments, Dair Sansyzbayev, and The J Thesis offer their picks.

Oakoff Investments: If I had to choose one software stock right now, I'd go with AppLovin (APP). I covered the stock multiple times, and since my upgrade in March 2025, the stock is up 156%, beating the market by a heavy margin. My core bullish thesis on APP remains in place: the new business model that they obtained after selling their mobile gaming business should theoretically allow margins to remain relatively high for longer, and the top-line expansion should be high enough for the firm to keep beating consensus.

AppLovin (APP) is still not in the S&P 500 Index (SP500), although it already has a massive market cap. I think they should eventually be included in there. When that happens, it's going to be a very bullish catalyst. The current valuation looks a bit too high, but APP is growing strongly enough to justify it, in my opinion.

Dair Sansyzbayev: Salesforce (CRM) looks like the most attractive software stock at the moment because it's currently trading as if the company has lost its technological edge due to AI. Valuation ratios are significantly lower than historical averages across the board despite CRM's EPS continuing to grow by double digits almost every quarter. 

The company's Q3 earnings release revealed that AI-related fears are likely overblown, as the company's main AI-powered product, Agentforce, demonstrated staggering 330% year-over-year ARR growth, and management said they are investing aggressively to improve the product further. Salesforce (CRM) has everything I expect from a fundamentally strong software company: its RPO demonstrates double-digit growth, there is robust operating leverage, and management is firmly committed to expanding the company's cross-selling potential.

The J Thesis: I think that Microsoft (MSFT) remains one of the best software stocks. It has a significant presence in the industry, underscoring business scale, consistency in excellent execution, and market-leading performance in high-growth markets such as AI and cloud. One could argue that MSFT could be compared to a niche technology ETF due to its conglomerate size and exposure to multiple industry-leading businesses.

The Mag 7 company has a streak of 11 consecutive double-beat quarters, delivers double-digit top- and bottom-line growth, and outpaces both peers and the benchmark. Microsoft (MSFT) operates at outstanding, above-market margins, and accelerating AI adoption may sustain elevated margins further. The software company trades at roughly 29x earnings multiple, a 21% premium versus the industry average of 24x, which remains insignificant compared to its dominant stance and tailwinds ahead.

Microsoft (MSFT) outweighs Amazon (AMZN) due to premium margins. Alphabet's Google (GOOG) (GOOGL) leads in search, but user preferences may gradually change, and Microsoft's stake in OpenAI (OPENAI) unlocks a new approach to navigating content online through generative AI. Salesforce (CRM) appears to be a cheap SaaS name, but can't compete with Microsoft's (MSFT) scale and cloud momentum. I think that sometimes investors don't need to find the next best bet. Sometimes, they need to stick to the leaders, as consistency and excellent execution matter.

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