RBC Capital analyst Rishi Jaluria has pointed to several software companies that could represent buying opportunities in the wake of a wide pullback across the sector. The sell-off accelerated after earnings releases from Microsoft (NASDAQ:MSFT) and ServiceNow (NYSE:NOW), each of which dropped 10%, with many other software names declining double digits in sympathy.
ServiceNow was trading at $118.36 and has fallen 40% over the last six months, placing the stock roughly 5% above its 52-week low of $113.13, according to InvestingPro data. Despite that retreat, the company still posts robust gross margins and remains on RBC’s radar.
Top picks singled out by RBC
- CrowdStrike (NASDAQ:CRWD) - The firm described CrowdStrike as "a key platform consolidator in cybersecurity," noting the company should benefit from AI adoption with multiple drivers extending through fiscal 2027. The stock itself fell about 5% amid the sector weakness.
- Datadog (NASDAQ:DDOG) - RBC characterized Datadog as "an AI winner as AI workloads ramp," while the shares were reported down 9% during the pullback.
- HubSpot (NYSE:HUBS) - HubSpot dropped approximately 11%, but RBC highlighted an "innovative AI roadmap that can drive improved win rates and real AI monetization."
In addition to those names, RBC indicated it favors Intuit (NASDAQ:INTU), MongoDB (NASDAQ:MDB), Microsoft (NASDAQ:MSFT), ServiceNow (NYSE:NOW) and Snowflake (NYSE:SNOW). The firm said it plans to follow up with more in-depth analysis on these software names in the near term.
ServiceNow results and analyst reactions
ServiceNow reported better-than-expected fourth-quarter results for 2025, delivering a 1.3% constant-currency revenue beat. The company also posted subscription revenue growth of 19.5% in constant currency for Q4 2025, outpacing the consensus Street forecast of 18%.
Several sell-side analysts reacted to the quarter with varying views. Cantor Fitzgerald reiterated an Overweight rating with a $200.00 price target, highlighting stronger-than-expected contracted remaining performance obligations (cRPO) growth of 21% versus the expected 19%. Bernstein maintained an Outperform rating with a $219.00 price target and described the company as a discount large-cap growth opportunity. Stifel trimmed its price target to $180.00 from $200.00, labeling the outlook mixed but keeping a Buy rating. DA Davidson reiterated a Buy rating with a $220.00 price target and pointed to momentum in Now Assist and CRM products. Despite the encouraging results and analyst commentary, ServiceNow’s stock declined about 5% in after-hours trading following the earnings release.
Valuation and research access
Even after its pullback, ServiceNow maintains high gross profit margins of 77.59% and is cited as appearing undervalued when measured against InvestingPro Fair Value estimates. For investors seeking deeper analysis, detailed Pro Research Reports covering more than 1,400 U.S. equities are available on the InvestingPro platform.
Bottom line
RBC Capital’s analyst Rishi Jaluria views the recent sector weakness as an opportunity to identify durable software businesses positioned to benefit from AI adoption and cybersecurity consolidation. The firm’s list blends names with clear AI-exposure and platform characteristics, while also highlighting companies that remain highly profitable on a margin basis. RBC plans to publish more thorough coverage of these picks in forthcoming research.