Software Stocks to Own in September 2026: 7 Names with Real Setup
A countdown spanning enterprise applications, observability, data streaming, backup, cybersecurity and cloud software highlights seven ways to participate in the software theme.
Software stocks are caught between two powerful narratives in September 2026. The first says artificial intelligence will compress pricing, automate development and make portions of application software easier to replace. The second says AI adoption is expanding the market for infrastructure, data, security and workflow tools. That tension is producing a more selective trade: investors are rewarding mission-critical platforms and questioning businesses with weak differentiation or limited pricing power. Snowflake’s early September 2026 results, which lifted its outlook, helped reinforce the more constructive interpretation that AI spending can translate into tangible software demand.
The structural backdrop remains supportive even as individual valuations diverge. Cloud migration continues, AI is changing product road maps and development teams, and cybersecurity requirements are rising as enterprises deploy more data and automated systems. The most important distinctions are now between horizontal and vertical SaaS, data and analytics, DevOps, identity and security, and AI-enabled productivity tools. Each category carries a different balance of recurring revenue, consumption sensitivity, margin durability and competitive intensity.
This countdown covers seven US-listed software-related companies, from established enterprise platforms to newer infrastructure and security specialists. The picks are presented in countdown order from No. 7 to No. 1, combining each company’s depth of exposure to the software theme with the quality of its financial profile. The result is a spread of business models rather than a single bet on one corner of the sector.
Our screen focused on US-listed companies with market capitalizations above $500 million and meaningful exposure to software, software infrastructure, enterprise applications, data platforms or cybersecurity. Ranking priority went first to the depth of thematic exposure and then to business fundamentals, including growth, profitability, valuation, operating quality and earnings execution. Composite quality grades and analyst consensus provide additional context, but they do not replace the underlying numbers. This is a countdown: the best pick is reserved for No. 1 at the end.
Market cap: $216.3B · Quality grade: B · Analyst consensus: Hold (avg target $245.35)
What they do. The company provides integrated software, consulting, infrastructure and financing solutions to enterprises worldwide. Its software portfolio includes hybrid-cloud and AI platforms, while consulting covers technology implementation, application modernization, managed services and AI-powered solutions; strategic relationships with major cloud, enterprise software and systems partners extend its reach across the corporate technology stack.
Why it fits.IBM is a broad, enterprise-oriented software exposure rather than a pure application-software growth story. Its hybrid-cloud and AI platforms, data-streaming capabilities, infrastructure services and modernization work align with enterprises trying to connect legacy environments to newer cloud and AI workloads. That breadth gives IBM relevance to the software theme, although the mix of consulting and infrastructure makes its exposure less direct than the more focused names higher in this list.
Numbers that matter. Revenue growth was 1.1% year over year, while earnings growth was negative 1.8%, showing a slower operating profile than the faster-growing software specialists. IBM reported a 58.1% gross margin, 16.55% operating margin and 15.52% net margin, alongside a 34.46% ROE. The core trailing P/E was 20.37 and forward P/E was 17.27; dividing the $216.3 billion market cap by $69.1 billion of revenue implies a price-to-sales ratio of roughly 3.1. The composite grade is supported by profitability and valuation factors, but the data also flags debt-to-equity and price-to-book concerns.
Recent momentum.IBM’s earnings history shows a 6/7 beat rate. The latest reported quarter, on July 22, 2026, came in at $2.93 per share against a $2.93 estimate, or no surprise, after beats of 5.5% and 5.4% in the prior two reported quarters. Analyst opinion is comparatively restrained: two Buy ratings, eight Holds and two Sells, producing a Hold consensus and a $245.35 average target.
What they do.SAP supplies enterprise applications spanning finance, procurement, manufacturing, supply chains, human resources, customer experience and spend management. Its model combines a broad installed base with cloud applications, SAP Business AI, the Business Technology Platform, Business Network, Signavio process analysis, LeanIX enterprise architecture tools and workflow products such as WalkMe.
Why it fits.SAP offers one of the clearest enterprise-application exposures in the group. Its software sits inside core business processes, giving the company a direct role in cloud migration, process automation and the deployment of AI into finance, HR, supply-chain and procurement workflows. Business AI and the Business Technology Platform also connect the application layer to the data and integration work required for broader enterprise modernization.
Numbers that matter.SAP produced 9.4% year-over-year revenue growth and 30.6% earnings growth. Its 73.7% gross margin, 27.62% operating margin and 20.41% net margin compare favorably with the lower-margin service-heavy profiles in this list, while ROE was 18.32% and ROA was 9.54%. The core trailing P/E was 27.31 and forward P/E was 21.74; market cap divided by reported revenue of $38.2 billion implies a price-to-sales ratio of roughly 6.3. The valuation is not inexpensive, but the forward multiple is below the trailing multiple and the composite grade is A-.
Recent momentum.SAP has beaten estimates in five of the last seven reported quarters. Its July 23, 2026 quarter was a setback, with earnings of $1.85 per share versus a $2.00 estimate, a 7.5% miss, following three consecutive beats ranging from 4.7% to 12.2%. The analyst breakdown remains constructive at seven Buys and two Holds, supporting a Buy consensus and a $250.33 average target.
What they do. Datadog operates an observability and security platform for cloud applications. Its product suite covers infrastructure and application monitoring, logs, network monitoring, database and data observability, real-user monitoring, cloud security, cloud SIEM, code security, incident response, workflow automation, cloud cost management and LLM observability, with a primarily cloud-based platform model.
Why it fits. Datadog is closely tied to the infrastructure-adjacent side of the software theme. As companies distribute workloads across cloud environments and add AI systems, they need tools to monitor performance, diagnose failures, manage costs and secure applications. LLM observability, security products and workflow automation extend the platform into areas where AI adoption can create additional monitoring and governance requirements rather than simply threaten substitution.
Numbers that matter. Revenue growth was 35.6% year over year and earnings growth was 1,498.5%, although the profitability base remains modest. Datadog reported a 79.5% gross margin, but only a 0.67% operating margin and 4.48% net margin; ROE was 4.7% and ROA was 0.18%. The core trailing P/E was 450.82 and forward P/E was 76.92, while market cap divided by $4.0 billion of revenue implies a price-to-sales ratio of roughly 20.8. That combination explains the gap between strong growth and the composite C+ grade.
Recent momentum. Datadog has beaten estimates in all seven of the reported quarters in its earnings history. On August 6, 2026, it reported $0.18 of earnings per share versus a $0.13 estimate, a 38.5% surprise, after a 17.6% beat in the prior quarter. Analysts remain positive, with 10 Buys, two Holds and one Sell, a Buy consensus and a $285.28 average target, though the valuation leaves less room for execution errors.
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What they do. Confluent provides a data-streaming platform that connects applications, systems and data layers. Confluent Cloud is its managed cloud-native SaaS offering, while Confluent Platform and Confluent Private Cloud serve self-managed deployments; connectors, Apache Flink, stream governance, Tableflow, WarpStream and Confluent Intelligence broaden the platform across real-time data, governance and AI workloads.
Why it fits. Confluent addresses a foundational problem in modern software stacks: making continuously generated data available to applications and AI systems in real time. Its streaming, governance and open-table-format products are relevant to cloud modernization and AI deployment, while the combination of managed and self-managed offerings gives enterprises flexibility across infrastructure environments. That is deep thematic exposure, even though the financial profile is still developing.
Numbers that matter. Revenue grew 20.5% year over year, but Confluent remained unprofitable, with a negative 27.53% operating margin, negative 25.31% net margin, negative 27.72% ROE and negative 8.09% ROA. Gross margin was stronger at 74.3%, highlighting the potential operating leverage if growth converts into scale. The company has no trailing P/E because earnings are negative, while forward P/E was 62.11; market cap divided by $1.17 billion of revenue implies a price-to-sales ratio of roughly 9.5. The C- grade reflects the distance between thematic appeal and current profitability.
Recent momentum. Confluent’s earnings history shows a 7/8 beat rate. The latest reported quarter, on February 11, 2026, produced earnings of $0.12 per share against a $0.10 estimate, a 20.0% surprise; the company also beat in the previous reported quarter, though it missed by 20.0% in July 2025. The analyst breakdown is eight Buys, seven Holds and one Sell, producing a Buy consensus and a $31.00 average target.
What they do. Rubrik provides data security and cyber-recovery software for enterprises, including protection for enterprise, unstructured, cloud and SaaS data. Its portfolio also includes threat analytics, data-security posture management, identity recovery, cyber-recovery services, RUBY AI automation and SENTRYAI system-health monitoring, delivered across cloud and enterprise environments.
Why it fits. Rubrik sits at the intersection of software, cybersecurity and the growing need to protect AI-era data. Its data-protection and identity-recovery products address resilience risks that become more consequential as enterprises move workloads to the cloud and expand digital systems. The company’s cyber-recovery focus and AI-enabled security operations give it a more defensive form of software exposure than conventional productivity applications.
Numbers that matter. Revenue growth was 37.9% year over year, but Rubrik’s profitability remains negative, with a negative 16.83% operating margin, negative 16.5% net margin and negative 6.74% ROA. Gross margin was 80.2%, an attractive base for eventual operating leverage, while trailing EPS was negative $1.27. There is no trailing P/E because earnings are negative, and forward P/E was 555.56; market cap divided by $1.54 billion of revenue implies a price-to-sales ratio of roughly 14.2. The C grade captures the contrast between exceptional growth and demanding valuation.
Recent momentum. Rubrik has beaten estimates in all eight reported quarters. On August 27, 2026, the company reported a loss of $0.27 per share versus an expected loss of $0.34, a 20.6% favorable surprise, following a $0.16 result against a negative $0.03 estimate in June. The analyst consensus is Buy at 4.8966, with three Buy ratings listed and no Hold or Sell figures reported; the average target is $119.81.
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This list uses a universe of US-listed companies with market capitalizations above $500 million and meaningful exposure to software or software infrastructure. The ranking first evaluates thematic depth: direct participation in enterprise applications, cloud platforms, data streaming, observability, cybersecurity, data protection or AI-enabled workflows. Business fundamentals then determine the order, including revenue and earnings growth, gross and operating margins, returns on capital where available, valuation, earnings surprises and balance-sheet considerations. Analyst consensus and average targets are presented as context rather than as standalone recommendations. The list is refreshed monthly, so rankings can change as financial results, estimates, valuations and the software market backdrop evolve.
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