Software Stocks Are Surging After Earnings— Is It Too Late to Buy?
Software stocks are having a strong earnings season. Atlassian jumped 35.31% after results. Doximity gained 32.62%. Palantir rose 29.45%.
And the rally is broader than just AI. A number of software companies are being rewarded for the same three things: stronger growth, better profitability and more bullish guidance.
First, investors are paying up for visible growth again.
$Atlassian Corporation PLC(TEAM)$ reported revenue growth of 28%, with cloud revenue up 31% and RPO up 44%. The company also raised its outlook.
$Palantir Technologies Inc.(PLTR)$ was another standout. Revenue surged 93%, while U.S. commercial revenue jumped 149%. Management also raised its full-year forecast.
That combination — strong growth plus higher guidance — is exactly what investors want to see right now.
Profitability is also becoming a bigger part of the story.
$Doximity, Inc.(DOCS)$ posted a 48% adjusted EBITDA margin. $Twilio(TWLO)$ generated $353 million in free cash flow. $Snap Inc(SNAP)$ also showed a sharp improvement in adjusted EBITDA and cash flow.
In other words, investors are not just paying for growth anymore. They are paying for growth that comes with better margins and stronger cash generation.
Guidance may be the biggest catalyst of all.
Many of the strongest performers on the list raised their full-year outlooks. That matters because investors care less about what already happened and more about what management expects next.
$Salesforce.com(CRM)$, for example, reported 11% revenue growth, while cRPO rose 14%. Its AI product ARR reached nearly $3.9 billion, up 210% from a year ago.
$CrowdStrike Holdings, Inc.(CRWD)$ also raised guidance, with ARR reaching $5.84 billion. Cloudflare posted 36% revenue growth and issued quarterly and full-year guidance above expectations.
The software trade is broadening out.AI remains an important theme, but the market is also rewarding companies that can deliver consistent revenue growth, improve margins and raise their outlooks.
That does not mean every software stock is headed higher. A lot of these post-earnings moves are still about expectations. The stocks with the biggest upside are usually the ones that beat estimates by the widest margin — and then give investors a reason to raise numbers again.
Question for Tigers:
If you could only hold one software stock right now, which would you choose — PLTR, CRM, TEAM or NET?
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TEAM and NET have impressive growth, while CRM offers stronger valuation discipline. But PLTR has the most powerful combination of AI demand, accelerating commercial revenue, expanding margins and raised guidance.
The key is not simply that Palantir is growing fast—it’s that growth is accelerating while profitability remains strong. Its U.S. commercial business is becoming a major engine, giving PLTR exposure to both enterprise AI adoption and government spending.
The biggest risk is valuation. PLTR already prices in extremely high expectations, so even a great quarter may not be enough if future guidance disappoints.
Still, for long-term upside, PLTR has the strongest growth story of the four. I’d rather buy the business with the biggest potential than chase the cheapest stock.
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That said, I wouldn’t ignore the valuation risk. At these growth rates, expectations are already extremely high, so even a strong earnings report could trigger a pullback if guidance disappoints. I’d rather DCA into PLTR than chase a big post-earnings rally.
$Atlassian Corporation PLC(TEAM)$ , $Salesforce.com(CRM)$ and $Cloudflare, Inc.(NET)$ all have compelling fundamentals, but for me PLTR has the strongest growth profile and AI exposure. I’m comfortable accepting the higher volatility because I’m investing with a longer-term horizon rather than trading the next earnings reaction.
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