On Monday, RBC Capital Markets highlighted a group of software companies poised to benefit from the latest advancements in generative artificial intelligence (GenAI), particularly through innovations like DeepSeek. The firm's analyst, Matthew Hedberg, identified several companies across various sectors of the software industry that could see positive impacts from the adoption and integration of GenAI technologies.
Salesforce (NYSE:CRM), known for its customer relationship management solutions, is expected to see increased interest in its Agentforce product due to the lower cost of GenAI workloads. This could lead to more pilot programs and potential upgrades, as well as a boost to its Data Cloud revenue. CrowdStrike Holdings (NASDAQ:CRWD) may benefit from an increase in GenAI app builds, which expands the attack surface, necessitating more advanced security tools like their Charlotte AI.
Datadog (NASDAQ:DDOG) could also see advantages from the growth of GenAI app builds, with a need for more monitoring solutions. The company previously reported that approximately 6% of its annual recurring revenue (ARR) came from AI-native customers, a significant increase from the previous year. GitLab (NASDAQ:GTLB) is likely to gain from GenAI app demand through its Duo Pro and Enterprise add-on offerings, which enhance developer productivity.
HubSpot (NYSE:HUBS) is positioned as an innovative front-office software company in the GenAI space, with products like Breeze and Breeze Intelligence likely to see increased usage and monetization. IBM (NYSE:IBM) has supported the use of smaller, cost-effective models and may find its AI infrastructure and Red Hat offerings benefiting from the accelerated application era of GenAI.
Intuit (NASDAQ:INTU) is well-placed to capitalize on GenAI disruption in tax prep and accounting, with potential for broader adoption of its Assist product. MongoDB (NASDAQ:MDB) could become the developer platform of choice for new GenAI applications, leveraging unstructured data and benefiting from lower development costs.
Microsoft (NASDAQ:MSFT) has already been monetizing GenAI, with its AI-related ARR reaching $13 billion in F2Q25, a 175% year-over-year increase. The company's Copilot offerings in various applications are estimated to be over $2 billion, growing roughly 300% year-over-year. Cloudflare (NYSE:NET) could benefit as GenAI app builds accelerate, with increased interest in its Workers platform and competitive pricing for storage, network, and compute resources.
NICE Ltd (NASDAQ:NICE) might see GenAI as a tailwind, contrary to market beliefs, by enhancing the value of AI throughout the call lifecycle. ServiceNow (NYSE:NOW) reported a significant increase in GenAI-related net new annual contract value (NNACV) in Q4/24, with its Now Assist service desk deals growing over 150% quarter-over-quarter.
Palo Alto Networks (NASDAQ:PANW) is in a strong position with its AI-specific security offerings, having reported AI ARR of approximately $250 million last quarter. According to InvestingPro data, the company demonstrates robust financial health with a "GREAT" overall score and impressive revenue growth of 15% over the last twelve months. With a substantial market capitalization of $118.37 billion and strong cash flows, PANW appears slightly overvalued based on InvestingPro's Fair Value analysis. For investors interested in AI-focused cybersecurity stocks, InvestingPro offers 15+ additional exclusive insights, including detailed valuation metrics and growth forecasts. Pegasystems (NASDAQ:PEGA) could expand its total addressable market with its Blueprint tool, driving greater PEGA usage and automation. Snowflake (NYSE:SNOW) stands to gain from its data storage capabilities, LLM-agnostic approach, and increasing Snowpark and Cortex adoption.
Varonis Systems (NASDAQ:VRNS) is expected to benefit from the focus on data governance and security as GenAI is deployed, as well as from the adoption of Microsoft Copilot and its coverage of Databricks. Zoom Video Communications (NASDAQ:ZM) is seen as an underappreciated GenAI beneficiary, with potential to leverage unstructured data and a federated AI approach that allows for the incorporation of new innovations. For investors seeking deeper insights into how AI is transforming the software industry, InvestingPro offers comprehensive research reports on 1,400+ US stocks, including detailed analysis of AI-driven growth potential, financial health metrics, and expert valuations. These reports provide institutional-grade insights, helping investors make informed decisions in the rapidly evolving AI landscape.
In other recent news, Palo Alto Networks, a prominent player in the cybersecurity sector, has seen a range of developments. The company's partnership with IBM resulted in a substantial contract with the UK's Emergency Services Network (ESN), valued at approximately $1.65 billion over seven years. This is expected to contribute significantly to Palo Alto's net new next-generation security annual recurring revenue, according to KeyBanc Capital Markets.
However, the company has faced several downgrades from BTIG, Deutsche Bank (ETR:DBKGn), and Guggenheim Securities due to concerns about limited growth catalysts and potential moderation in Federal IT spending. Despite these challenges, Palo Alto Networks continues to advance its platformization strategy, recently acquiring QRadar SaaS and launching the Prisma Access Browser.
Additionally, Palo Alto Networks has introduced a Quantum (NASDAQ:QMCO) Random Number Generator (QRNG) Open API framework, a collaborative effort aimed at standardizing the integration of quantum randomness into security systems. JMP Securities maintained a positive stance on the company, reiterating a Market Outperform rating with a price target of $208.00. These are the recent developments in Palo Alto Networks.
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