In this article, we will take a look at the most profitable software stocks to buy now.
In this era of global technology transformation, software companies have had their fair share of traction, and rightly so! However, these companies have recently been in the spotlight amid a potential “doomsday” scenario. On a recent CNBC interview, Tom Lee, Chairman of Bitmine Immersion and Co-Founder & Head of Research at Fundstrat, warned that AI is adversely impacting the $450 billion software sector. Software companies, which once “ate the world,” are now increasingly exposed to AI-driven disruption risks, he noted.
While the software sector remains under pressure, recent research still indicates healthy underlying growth. On January 23, Globe Newswire cited a report by Research and Markets, titled “Business Software – Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2026-2031).” According to this report, the global business software market is well-positioned for significant growth, with the market size projected to reach USD 737.3 billion by 2026. This level is significantly higher than USD 660 billion in 2025, with analysts expecting it to climb to USD 1.28 trillion by 2031. Thus, this growth translates to a solid CAGR of 11.71% between 2026 and 2031.
The report cites reasons for this growth, noting that enterprises are accelerating the adoption of “AI-enabled workflow automation, cloud-native deployment, and data-centric architectures that embed analytics directly into operational processes.” In addition, growth will be supported by the increasing demand for ESG reporting, the building of resilient regional supply chains, and the adoption of low-code development platforms. While today may seem difficult for the software space, the path ahead could unfold very differently.
Against this backdrop, we have compiled a list of the 13 most profitable software stocks to buy now.
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Our methodology
To compile our list of the 13 most profitable software stocks to buy now, we used the Stock Analysis screener to filter for software stocks with market capitalizations exceeding $2 billion that reported operating and net profit margins over 20%. Next, we shortlisted stocks with an upside potential of at least 5%. From this pool, we selected the top 13 stocks with the highest trailing twelve-month (TTM) net income. These are then ranked in ascending order by net income. We also included data on hedge fund holdings in these companies based on Insider Monkey’s database, as of Q3 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
13. F5, Inc. (NASDAQ:FFIV)
Net Income (TTM): $705.99 million
Number of Hedge Fund holdings: 40
On January 28, Matthew Hedberg of RBC Capital Markets raised the price target on F5, Inc. (NASDAQ:FFIV) to $345 from $325 and maintained an Outperform rating. This follows the company’s strong beat-and-raise quarter, with the October 2025 security incident having a limited impact on results. That said, the firm noted that the company’s raised FY26 guidance now reflects “essentially no conservatism for the incident.”
On the same day, Evercore ISI reiterated its In Line rating and a price target of $320 on F5, Inc. (NASDAQ:FFIV), which matches the consensus estimate, suggesting an upside potential of 16.02%. Similarly, Piper Sandler raised the price target on the company to $325 from $295 and kept an Overweight rating on January 28.
The firm pointed out that F5, Inc. (NASDAQ:FFIV) is expanding its core offerings to include hybrid multi-cloud, AI advancement, and delivery/security convergence. Piper Sandler advises owning the stock, citing “Year of Refresh, F5’s own refresh/EoSS, estimates de-risked, software acceleration coming” among its rationale for the bullish guidance.
F5, Inc. (NASDAQ:FFIV) is a Washington-based provider of multicloud application security and delivery solutions. Founded in 1996, the company offers distributed cloud services, multi-cloud networking, domain name system, and content delivery network.
12. PTC Inc. (NASDAQ:PTC)
Net Income (TTM): $818.28 million
Number of Hedge Fund holdings: 51
On February 9, TheFly reported that BofA reduced its price target on PTC Inc. (NASDAQ:PTC) to $172, down from $190, and reiterated a Neutral rating. The company’s macroeconomic backdrop remains challenging but shows no further deterioration, the firm noted. That said, it lowered its annual sales outlook following the earnings report.
Earlier, on February 6, BMO Capital reduced its price target on PTC Inc. (NASDAQ:PTC) to $189 from $219 and maintained an Outperform rating post financial results. The company’s quarterly performance is what the firm called “okay,” noting that commentary on contracted deferred Annual Recurring Revenue (ARR) offers some reassurance about the usual back-half growth ramp.
BMO Capital remains optimistic about the company’s strategy, saying that PTC Inc. (NASDAQ:PTC)’s focus on advancing CAD, data management, and life-cycle solutions for manufacturers offers long-lasting opportunities. The company’s stable growth outlook and share repurchase plans are the basis of the firm’s bullish stance.
PTC Inc. (NASDAQ:PTC) is a Massachusetts-based software company that offers products including Windchill, ThingWorx, ServiceMax, and Arena. Incorporated in 1985, the company also offers solutions, such as Kepware, Kepware Edge, and KEPServerEX.
