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4 Software Stocks Set to Pull Off a Beat This Earnings Season
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Software stocks continue to ride on a strong demand cycle, supported by steady digital transformation and the fast adoption of artificial intelligence (AI). AI, generative AI and now Agentic AI are moving from experimentation to real business use cases. At the same time, software-as-a-service models, cloud migration, hybrid work model and higher usage of online payment platforms remain durable growth drivers. Against this backdrop, companies such as Snowflake (SNOW - Free Report) , Match Group (MTCH - Free Report) , Synopsys (SNPS - Free Report) and Cloudflare (NET - Free Report) appear well-positioned to deliver better-than-expected results this earnings season.
What Is Favoring 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
Snowflake is expected to report fourth-quarter fiscal 2026 results on Feb. 25. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +8.08%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.25 billion, which calls for a year-over-year increase of 26.9%. The consensus mark for earnings stands at 27 cents per share, indicating a decline of 10% from the year-ago quarter’s earnings of 30 cents.
Snowflake’s expanding customer footprint, continued platform innovation and strong ecosystem of partners provide a solid foundation for long-term growth. It benefits from its role in the enterprise AI revolution, with strong adoption of its AI capabilities like Snowflake Intelligence and Cortex AI driving customer growth.
Partnerships with industry leaders like SAP, Google Cloud and Anthropic, along with integrations with Workday, Splunk and Palantir, are a plus. With record customer additions, accelerating remaining performance obligation (RPO) growth and a $100M AI revenue run rate achieved ahead of schedule, SNOW is poised for durable long-term growth.
Match Group is scheduled to report fourth-quarter 2025 results on Feb. 3. The company carries a Zacks Rank #3 and has an Earnings ESP of +3.38%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $871.6 million, which calls for a year-over-year increase of 1.3%. The consensus mark for earnings stands at $1.01 per share, indicating a year-over-year jump of 23.2%.
Match Group benefits from its first-mover advantage in online dating, backed by decades of presence and a trusted reputation. Rising global singles and expanding adoption of online dating provide strong tailwinds, while its diverse brand portfolio continues to attract and retain subscribers. Tinder remains the key growth driver, supported by innovative features, gender inclusivity and international expansion. A mobile-first strategy boosts engagement and conversion to paid memberships, while new initiatives and product enhancements position the company for future growth.
Synopsys is scheduled to report first-quarter fiscal 2026 results on Feb. 25. The company carries a Zacks Rank #3 and has an Earnings ESP of +0.38%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.39 billion, which calls for a year-over-year increase of 64.3%. The consensus mark for earnings stands at $3.57 per share, indicating growth of 17.8% from the year-ago quarter’s earnings of $3.03.
Synopsys is gaining from solid design wins, driven by a robust product portfolio. Growth in the hybrid working trend is driving demand for bandwidth. Strong traction for Synopsys’ Fusion Compiler product is boosting its top line. The growing demand for advanced technology, design, IP and security solutions also creates solid prospects. The rising impact of artificial intelligence, 5G, the Internet of Things and big data is driving investments in new computing and machine learning architectures, boosting demand for Synopsys’ products and solutions.
Cloudflare is scheduled to report fourth-quarter 2025 results on Feb. 10. The company currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The Zacks Consensus Estimate for revenues of $590.17 million indicates year-over-year growth of 28.3%. The consensus mark for the bottom line is pegged at earnings per share of 27 cents, suggesting robust year-over-year growth of 42.1%.
Cloudflare is benefiting from an increasing customer base, driven by its robust portfolio of security solutions. Growing momentum among large customers remains a major tailwind. Aggravated cyberattacks, the hybrid working trend and a zero-trust approach are aiding it in winning multiple clients. A continuous focus on client retention based on high client satisfaction is driving the dollar-based net retention rate. In the third quarter of 2025, its dollar-based net retention rate was 119%.
Image: Bigstock
4 Software Stocks Set to Pull Off a Beat This Earnings Season
Software stocks continue to ride on a strong demand cycle, supported by steady digital transformation and the fast adoption of artificial intelligence (AI). AI, generative AI and now Agentic AI are moving from experimentation to real business use cases. At the same time, software-as-a-service models, cloud migration, hybrid work model and higher usage of online payment platforms remain durable growth drivers. Against this backdrop, companies such as Snowflake (SNOW - Free Report) , Match Group (MTCH - Free Report) , Synopsys (SNPS - Free Report) and Cloudflare (NET - Free Report) appear well-positioned to deliver better-than-expected results this earnings season.
What Is Favoring 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
Snowflake is expected to report fourth-quarter fiscal 2026 results on Feb. 25. The company currently carries a Zacks Rank #3 and has an Earnings ESP of +8.08%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $1.25 billion, which calls for a year-over-year increase of 26.9%. The consensus mark for earnings stands at 27 cents per share, indicating a decline of 10% from the year-ago quarter’s earnings of 30 cents.
Snowflake’s expanding customer footprint, continued platform innovation and strong ecosystem of partners provide a solid foundation for long-term growth. It benefits from its role in the enterprise AI revolution, with strong adoption of its AI capabilities like Snowflake Intelligence and Cortex AI driving customer growth.
Partnerships with industry leaders like SAP, Google Cloud and Anthropic, along with integrations with Workday, Splunk and Palantir, are a plus. With record customer additions, accelerating remaining performance obligation (RPO) growth and a $100M AI revenue run rate achieved ahead of schedule, SNOW is poised for durable long-term growth.
Snowflake Inc. Price and EPS Surprise
Snowflake Inc. price-eps-surprise | Snowflake Inc. Quote
Match Group is scheduled to report fourth-quarter 2025 results on Feb. 3. The company carries a Zacks Rank #3 and has an Earnings ESP of +3.38%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $871.6 million, which calls for a year-over-year increase of 1.3%. The consensus mark for earnings stands at $1.01 per share, indicating a year-over-year jump of 23.2%.
Match Group benefits from its first-mover advantage in online dating, backed by decades of presence and a trusted reputation. Rising global singles and expanding adoption of online dating provide strong tailwinds, while its diverse brand portfolio continues to attract and retain subscribers. Tinder remains the key growth driver, supported by innovative features, gender inclusivity and international expansion. A mobile-first strategy boosts engagement and conversion to paid memberships, while new initiatives and product enhancements position the company for future growth.
Match Group Inc. Price and EPS Surprise
Match Group Inc. price-eps-surprise | Match Group Inc. Quote
Synopsys is scheduled to report first-quarter fiscal 2026 results on Feb. 25. The company carries a Zacks Rank #3 and has an Earnings ESP of +0.38%. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $2.39 billion, which calls for a year-over-year increase of 64.3%. The consensus mark for earnings stands at $3.57 per share, indicating growth of 17.8% from the year-ago quarter’s earnings of $3.03.
Synopsys is gaining from solid design wins, driven by a robust product portfolio. Growth in the hybrid working trend is driving demand for bandwidth. Strong traction for Synopsys’ Fusion Compiler product is boosting its top line. The growing demand for advanced technology, design, IP and security solutions also creates solid prospects. The rising impact of artificial intelligence, 5G, the Internet of Things and big data is driving investments in new computing and machine learning architectures, boosting demand for Synopsys’ products and solutions.
Synopsys, Inc. Price and EPS Surprise
Synopsys, Inc. price-eps-surprise | Synopsys, Inc. Quote
Cloudflare is scheduled to report fourth-quarter 2025 results on Feb. 10. The company currently has an Earnings ESP of +0.20% and a Zacks Rank #3. The Zacks Consensus Estimate for revenues of $590.17 million indicates year-over-year growth of 28.3%. The consensus mark for the bottom line is pegged at earnings per share of 27 cents, suggesting robust year-over-year growth of 42.1%.
Cloudflare is benefiting from an increasing customer base, driven by its robust portfolio of security solutions. Growing momentum among large customers remains a major tailwind. Aggravated cyberattacks, the hybrid working trend and a zero-trust approach are aiding it in winning multiple clients. A continuous focus on client retention based on high client satisfaction is driving the dollar-based net retention rate. In the third quarter of 2025, its dollar-based net retention rate was 119%.
Cloudflare, Inc. Price and EPS Surprise
Cloudflare, Inc. price-eps-surprise | Cloudflare, Inc. Quote