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4 Software Stocks Poised to Outshine Expectations This Earnings Season
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Software stocks have been benefiting from the ongoing digitalization wave, along with the strong adoption of artificial intelligence (AI), generative AI (GenAI) and Agentic AI. The growing proliferation of software-as-a-service (SaaS), the rapid migration to cloud platforms, the increasing demand for solutions that support a hybrid/flexible work model and the rising user penetration of online payment solutions are likely to have remained major tailwinds for software companies like CoreWeave (CRWV - Free Report) , BILL Holdings (BILL - Free Report) , Affirm Holdings (AFRM - Free Report) and Unity Software (U - Free Report) .
Factors That Favor Software Stocks
The growing proliferation of AI-powered voice recognition, telemedicine, learning management, infrastructure monitoring and business spend management software is expected to have benefited industry players in the quarter under review. Enterprise workspace solutions, enterprise communication platforms and online education portals are likely to have continued contributing as well.
The spike in the adoption of cloud-based services, the increasing proliferation of IoT and AR/VR devices and the accelerated deployment of 5G are expected to have aided the performance of software stocks this earnings season. Strong momentum across enterprise collaboration software, remote desktop tools, natural language processing and time tracking tools may have hugely favored the software industry this earnings season.
Rising cyberattacks, including Distributed Denial of Service attacks and attacks using malware through Transport Layer Security and Secure Sockets Layer protocols, are redefining the cyber threat landscape. Enterprises are spending more on cloud-based security solutions. Moreover, the software-defined approach is increasingly getting preferred over legacy hardware-centric models due to the need for agility.
The increasing customer-centric approach is allowing end-users to perform all required actions with minimal intervention from software providers. The pay-as-you-go model helps Internet Software providers scale their offerings to the needs of different users. The subscription-based business model ensures recurring revenues for the industry participants. The affordability of the SaaS delivery model, particularly for small and medium-sized businesses, is another major driver.
How to Make the Right Choice?
With the presence of several industry participants, finding the right software stocks with the potential to beat on earnings can be daunting. However, our proprietary methodology makes this task simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP is our proprietary methodology for determining stocks that have the maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
CoreWeave is slated to report third-quarter 2025 results on Nov. 10. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +15.66%. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the third quarter, CRWV projects revenues to be between $1.26 billion and $1.3 billion, while the Zacks Consensus Estimate is pegged at $1.28 billion. The consensus mark for the bottom line stands at a loss of 39 cents per share.
Increasing demand for CoreWeave’s cloud software and infrastructure services amid rising AI infrastructure spending is likely to have driven the top-line performance in the third quarter. In the last reported quarter, CRWV’s revenues jumped 207% year over year, ending the quarter with a backlog of $30.1 billion.
The rapid rise of CoreWeave is driven by its ability to capitalize on the generative AI boom. Enterprise AI adoption is accelerating, driven by its strategic imperative. CoreWeave is viewed as a force multiplier, enabling this innovation and growth for both training and inference workloads. The company’s continued focus on scaling capacity and enhancing services is driving strong momentum against a supply-constrained market backdrop with better-than-anticipated sales performance.
BILL Holdings is scheduled to report first-quarter fiscal 2026 results on Nov. 6. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.85%. The Zacks Consensus Estimate for first-quarter revenues is pegged at $390.6 million, which calls for a year-over-year increase of approximately 9%. The consensus mark for earnings stands at 51 cents per share, indicating a decline of 19.1% from the year-ago quarter’s earnings of 63 cents.
BILL is benefiting from an expanding small and medium businesses (SMBs) clientele and a diversified business model. BILL is leveraging AI to make its solutions easier to use, more automated and predictive. It is also working on integrating generative AI into its solutions to enhance customer experience.
The company emphasized its leadership in automating financial operations for SMBs with innovations like embedded 1099 functionality and advanced payment solutions. BILL’s strong balance sheet and free cash flow-generating ability remain noteworthy.
Affirm Holdings is slated to report first-quarter fiscal 2026 results on Nov. 6. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +3.53%. The Zacks Consensus Estimate for first-quarter revenues is pegged at $885 million, indicating year-over-year growth of 26.7%. The consensus mark for the bottom line stands at earnings per share (EPS) of 11 cents per share, suggesting a strong improvement from the year-ago quarter’s loss of 31 cents.
Affirm has achieved strong revenue growth in past quarters through diverse income streams, including merchant network fees, interest from loans and virtual card revenues. Growing active merchant numbers, improving gross merchandise value (GMV), and average balance of loans are driving merchant network revenues and interest income. The trend is likely to have continued in the to-be-reported quarter.
Key partnerships, like those with Apple Pay, Worldpay, Fiserv, Wayfair and Hotels.com, play a vital role in its expansion. Additionally, Affirm Holdings is aggressively scaling beyond U.S. borders, leveraging its partnerships. The company has already entered the U.K. market and is now preparing to expand into Western Europe. It also intends to relaunch in Australia. With access to more than 377,000 merchants, these expansions could open lucrative new growth corridors.
Unity Software is scheduled to report third-quarter 2025 results on Nov. 5. The company currently has an Earnings ESP of +3.03% and a Zacks Rank #3. The Zacks Consensus Estimate for revenues of $447.6 million indicates year-over-year growth of 0.2%. The consensus mark for bottom-line is pegged at earnings per share (EPS) of 17 cents, suggesting a robust improvement from the year-ago quarter’s loss of 31 cents per share.
Unity Software’s top line in the third quarter is likely to have been pressured by a few key factors. While the rollout of the AI-powered Unity Vector platform was a strategic success, its positive financial impact might not have been fully realized within the quarter. At the same time, the company expects declines in revenues from certain legacy ad products as resources have been increasingly shifted toward Vector. This internal product mix transition has created short-term revenue friction, offsetting some of the early gains from Vector’s stronger performance.
However, management had expected a stronger trajectory in the third quarter for several reasons. Stabilization is returning to non-network ad products, supported by product upgrades and AI integration. The Unity Ad Network now represents about half of ad revenues, and its faster growth is aiding more weight in overall results. Vector is delivering increasing value, with user acquisition quality and volume improving more than 15% sequentially in the second quarter. Together, these factors are projected to have supported mid-single-digit sequential growth in the ad segment for the third quarter.
Image: Bigstock
4 Software Stocks Poised to Outshine Expectations This Earnings Season
Software stocks have been benefiting from the ongoing digitalization wave, along with the strong adoption of artificial intelligence (AI), generative AI (GenAI) and Agentic AI. The growing proliferation of software-as-a-service (SaaS), the rapid migration to cloud platforms, the increasing demand for solutions that support a hybrid/flexible work model and the rising user penetration of online payment solutions are likely to have remained major tailwinds for software companies like CoreWeave (CRWV - Free Report) , BILL Holdings (BILL - Free Report) , Affirm Holdings (AFRM - Free Report) and Unity Software (U - Free Report) .
Factors That Favor Software Stocks
The growing proliferation of AI-powered voice recognition, telemedicine, learning management, infrastructure monitoring and business spend management software is expected to have benefited industry players in the quarter under review. Enterprise workspace solutions, enterprise communication platforms and online education portals are likely to have continued contributing as well.
The spike in the adoption of cloud-based services, the increasing proliferation of IoT and AR/VR devices and the accelerated deployment of 5G are expected to have aided the performance of software stocks this earnings season. Strong momentum across enterprise collaboration software, remote desktop tools, natural language processing and time tracking tools may have hugely favored the software industry this earnings season.
Rising cyberattacks, including Distributed Denial of Service attacks and attacks using malware through Transport Layer Security and Secure Sockets Layer protocols, are redefining the cyber threat landscape. Enterprises are spending more on cloud-based security solutions. Moreover, the software-defined approach is increasingly getting preferred over legacy hardware-centric models due to the need for agility.
The increasing customer-centric approach is allowing end-users to perform all required actions with minimal intervention from software providers. The pay-as-you-go model helps Internet Software providers scale their offerings to the needs of different users. The subscription-based business model ensures recurring revenues for the industry participants. The affordability of the SaaS delivery model, particularly for small and medium-sized businesses, is another major driver.
How to Make the Right Choice?
With the presence of several industry participants, finding the right software stocks with the potential to beat on earnings can be daunting. However, our proprietary methodology makes this task simple.
You could narrow down your choices by looking at stocks that have the perfect combination of two key elements — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).
Earnings ESP is our proprietary methodology for determining stocks that have the maximum chances of beating estimates in their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this favorable mix of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
CoreWeave is slated to report third-quarter 2025 results on Nov. 10. The company currently carries a Zacks Rank #2 and has an Earnings ESP of +15.66%. You can see the complete list of today’s Zacks #1 Rank stocks here.
For the third quarter, CRWV projects revenues to be between $1.26 billion and $1.3 billion, while the Zacks Consensus Estimate is pegged at $1.28 billion. The consensus mark for the bottom line stands at a loss of 39 cents per share.
Increasing demand for CoreWeave’s cloud software and infrastructure services amid rising AI infrastructure spending is likely to have driven the top-line performance in the third quarter. In the last reported quarter, CRWV’s revenues jumped 207% year over year, ending the quarter with a backlog of $30.1 billion.
The rapid rise of CoreWeave is driven by its ability to capitalize on the generative AI boom. Enterprise AI adoption is accelerating, driven by its strategic imperative. CoreWeave is viewed as a force multiplier, enabling this innovation and growth for both training and inference workloads. The company’s continued focus on scaling capacity and enhancing services is driving strong momentum against a supply-constrained market backdrop with better-than-anticipated sales performance.
CoreWeave Inc. Price and EPS Surprise
CoreWeave Inc. price-eps-surprise | CoreWeave Inc. Quote
BILL Holdings is scheduled to report first-quarter fiscal 2026 results on Nov. 6. The company carries a Zacks Rank #2 and has an Earnings ESP of +0.85%. The Zacks Consensus Estimate for first-quarter revenues is pegged at $390.6 million, which calls for a year-over-year increase of approximately 9%. The consensus mark for earnings stands at 51 cents per share, indicating a decline of 19.1% from the year-ago quarter’s earnings of 63 cents.
BILL is benefiting from an expanding small and medium businesses (SMBs) clientele and a diversified business model. BILL is leveraging AI to make its solutions easier to use, more automated and predictive. It is also working on integrating generative AI into its solutions to enhance customer experience.
The company emphasized its leadership in automating financial operations for SMBs with innovations like embedded 1099 functionality and advanced payment solutions. BILL’s strong balance sheet and free cash flow-generating ability remain noteworthy.
BILL Holdings, Inc. Price and EPS Surprise
BILL Holdings, Inc. price-eps-surprise | BILL Holdings, Inc. Quote
Affirm Holdings is slated to report first-quarter fiscal 2026 results on Nov. 6. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +3.53%. The Zacks Consensus Estimate for first-quarter revenues is pegged at $885 million, indicating year-over-year growth of 26.7%. The consensus mark for the bottom line stands at earnings per share (EPS) of 11 cents per share, suggesting a strong improvement from the year-ago quarter’s loss of 31 cents.
Affirm has achieved strong revenue growth in past quarters through diverse income streams, including merchant network fees, interest from loans and virtual card revenues. Growing active merchant numbers, improving gross merchandise value (GMV), and average balance of loans are driving merchant network revenues and interest income. The trend is likely to have continued in the to-be-reported quarter.
Key partnerships, like those with Apple Pay, Worldpay, Fiserv, Wayfair and Hotels.com, play a vital role in its expansion. Additionally, Affirm Holdings is aggressively scaling beyond U.S. borders, leveraging its partnerships. The company has already entered the U.K. market and is now preparing to expand into Western Europe. It also intends to relaunch in Australia. With access to more than 377,000 merchants, these expansions could open lucrative new growth corridors.
Affirm Holdings, Inc. Price and EPS Surprise
Affirm Holdings, Inc. price-eps-surprise | Affirm Holdings, Inc. Quote
Unity Software is scheduled to report third-quarter 2025 results on Nov. 5. The company currently has an Earnings ESP of +3.03% and a Zacks Rank #3. The Zacks Consensus Estimate for revenues of $447.6 million indicates year-over-year growth of 0.2%. The consensus mark for bottom-line is pegged at earnings per share (EPS) of 17 cents, suggesting a robust improvement from the year-ago quarter’s loss of 31 cents per share.
Unity Software’s top line in the third quarter is likely to have been pressured by a few key factors. While the rollout of the AI-powered Unity Vector platform was a strategic success, its positive financial impact might not have been fully realized within the quarter. At the same time, the company expects declines in revenues from certain legacy ad products as resources have been increasingly shifted toward Vector. This internal product mix transition has created short-term revenue friction, offsetting some of the early gains from Vector’s stronger performance.
However, management had expected a stronger trajectory in the third quarter for several reasons. Stabilization is returning to non-network ad products, supported by product upgrades and AI integration. The Unity Ad Network now represents about half of ad revenues, and its faster growth is aiding more weight in overall results. Vector is delivering increasing value, with user acquisition quality and volume improving more than 15% sequentially in the second quarter. Together, these factors are projected to have supported mid-single-digit sequential growth in the ad segment for the third quarter.
Unity Software Inc. Price and EPS Surprise
Unity Software Inc. price-eps-surprise | Unity Software Inc. Quote