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The Zacks Internet Software industry players like MongoDB, Affirm and Elastic are benefiting from rapid adoption of AI, which is expanding software usage. AI is driving higher platform engagement, broader enterprise adoption and new monetization opportunities. The transition from traditional generative AI applications to autonomous AI agents is emerging as a significant growth driver for industry players.
Enterprises are increasingly seeking platforms that enable AI agents to access real-time operational data, execute complex workflows and automate decision-making. Growing adoption of generative AI is increasing the importance of vector search, semantic retrieval, embedding models and hybrid search technologies. The proliferation of AI applications, cloud-native workloads and distributed infrastructure is increasing the complexity of software performance monitoring.
Industry Description
The Zacks Internet Software industry comprises companies offering application performance monitoring, infrastructure and application software, DevOps deployment and Security software. Industry participants offer online payment solutions, asset optimization software, multi-cloud application security and delivery, social networking, 3D printing applications, and cloud content management solutions.
They use the SaaS-based cloud computing model to deliver solutions to end-users, as well as enterprises. As a result, subscriptions are the primary revenue source. Advertising is also a major revenue source. Industry participants target a variety of end markets, including banking and financial services, construction, consumer packaged goods, education, energy, legal, various service providers, federal governments, and animal health technology and services.
3 Trends Shaping the Future of the Internet Software Industry
Enterprise Software Infrastructure Growing Rapidly: The industry is benefiting from rapid AI adoption, which is driving demand for enterprise software infrastructure. AI-generated code is driving sharp increases in code pushes and platform usage, creating structural demand for DevSecOps platforms that can manage security, governance and deployment at machine scale.
The growing requirement for integrated platforms capable of orchestrating both human developers and AI agents, while maintaining compliance and operational control, is benefiting the industry's prospects. Platform consolidation is becoming increasingly attractive as enterprises seek unified data and AI infrastructure.
Consumption-Based Pricing Gains Traction: The emergence of AI-native pricing models is a key catalyst. The industry players are moving beyond traditional seat-based licensing by introducing consumption-based credits and outcome-driven pricing. The companies are allowing customers to scale usage as AI adoption expands, opening new monetization channels that extend beyond conventional software subscriptions. AI-powered agents, automation and consumption-based pricing are creating incremental revenue streams while increasing customer productivity.
AI Agents & AI-Workloads Create Opportunities: The growing need to secure cloud platforms amid the increasing risks of cyberattacks and hacking drives the demand for web-based cybersecurity software. As enterprises continue to move their on-premises workloads to cloud environments, application and infrastructure monitoring are gaining importance. This is increasing the demand for web-based performance management monitoring tools. AI applications, AI agents and cloud-based AI workloads are expanding the attack surface for businesses, which bodes well for industry participants.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Internet Software industry, placed within the broader Zacks Computer and Technology sector, carries a Zacks Industry Rank #80, which places it in the top 32% of more than 247 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's position in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group's earnings growth potential. The industry's earnings estimates for 2026 have moved north by 2.4% since July 31, 2026.
Given the bullish outlook of the industry, there are a number of stocks worth picking for healthy portfolio returns. However, before we present the top industry picks, it is worth looking at the industry's shareholder returns and current valuation first.
Industry Lags S&P 500 and Sector
The Zacks Internet Software industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 Index in the past year.
The industry has dropped 11% over this period compared with the S&P 500's jump of 12.2% and the broader sector's appreciation of 12.1%.
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is a commonly used multiple for valuing Internet Software stocks, we see that the industry is currently trading at 4.03X compared with the S&P 500's 4.55X and the sector's forward 12-month P/S of 5.57X.
Over the last five years, the industry has traded as high as 6.54X and as low as 3.22X, with a median of 4.82X.
3 Internet Software Stocks to Buy Right Now
MongoDB: This Zacks Rank #1 (Strong Buy) stock is benefiting from growing demand for its Atlas cloud database platform, driven by enterprise modernization and increasing adoption of AI applications. You can see the complete list of today's Zacks #1 Rank stocks here.
Growing adoption of Atlas Vector Search, Voyage AI Embeddings and the managed Model Context Protocol (MCP) Server is strengthening MongoDB's position in agentic AI applications. Increasing demand from AI-native companies and frontier AI laboratories is expected to create additional growth opportunities. MongoDB's prospects are benefiting from growing demand for its Enterprise Advanced (EA) solutions, particularly across financial services, technology and government organizations.
MongoDB shares have dropped 33.7% year to date (YTD). The Zacks Consensus Estimate for 2026 earnings has inched up by a penny to $1.04 per share over the past 30 days.
Affirm: Another Zacks Rank #1 company, Affirm is benefiting from growing adoption of its buy now, pay later (BNPL) solutions among online merchants and consumers. The company is currently available on 80 of the top 250 e-commerce websites, highlighting significant opportunities for further merchant penetration. Expanding relationships with major payment service providers, growing merchant integrations and increasing consumer preference for flexible payment options are expected to support gross merchandise volume (GMV) growth.
Affirm's growth prospects are benefiting from increasing adoption of the Affirm Card and expansion into offline commerce. Consumers using the Affirm Card spend approximately twice as much as average Affirm consumers, highlighting the product's potential to drive higher engagement and transaction volumes.
Affirm shares have dropped 48.9% YTD. The Zacks Consensus Estimate for its 2026 earnings is pegged at $13.11 per share, down by a penny in the past 30 days.
Elastic: This Zacks Rank #1 company is benefiting from growing demand for AI-powered search and cybersecurity solutions as enterprises increasingly deploy generative and agentic AI applications. The company's Elasticsearch platform supports text, vector and hybrid search capabilities, enabling organizations to retrieve accurate information from structured and unstructured datasets.
The introduction of VectorDB index mode, Jina embedding and reranking models, and enhancements to Agent Builder is strengthening Elastic's competitive positioning. Growing demand for AI-powered search, enterprise knowledge retrieval and automated security operations is expected to drive subscription revenue growth and customer expansion.
Elastic shares have dropped 16.4% YTD. The Zacks Consensus Estimate for ESTC's fiscal 2027 earnings is pegged at 81 cents per share, unchanged over the past 30 days.
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Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
View the Zacks #1 Rank List
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Zacks Industry Outlook Highlights MongoDB, Affirm and Elastic
For Immediate Release
Chicago, IL – October 29, 2026 – Today, Zacks Equity Research discusses MongoDB (MDB - Free Report) , Affirm (AFRM - Free Report) and Elastic (ESTC - Free Report) .
Industry: Internet Services
Link: https://www.zacks.com/commentary/3017661/3-internet-software-stocks-to-buy-from-a-prospering-industry
The Zacks Internet Software industry players like MongoDB, Affirm and Elastic are benefiting from rapid adoption of AI, which is expanding software usage. AI is driving higher platform engagement, broader enterprise adoption and new monetization opportunities. The transition from traditional generative AI applications to autonomous AI agents is emerging as a significant growth driver for industry players.
Enterprises are increasingly seeking platforms that enable AI agents to access real-time operational data, execute complex workflows and automate decision-making. Growing adoption of generative AI is increasing the importance of vector search, semantic retrieval, embedding models and hybrid search technologies. The proliferation of AI applications, cloud-native workloads and distributed infrastructure is increasing the complexity of software performance monitoring.
Industry Description
The Zacks Internet Software industry comprises companies offering application performance monitoring, infrastructure and application software, DevOps deployment and Security software. Industry participants offer online payment solutions, asset optimization software, multi-cloud application security and delivery, social networking, 3D printing applications, and cloud content management solutions.
They use the SaaS-based cloud computing model to deliver solutions to end-users, as well as enterprises. As a result, subscriptions are the primary revenue source. Advertising is also a major revenue source. Industry participants target a variety of end markets, including banking and financial services, construction, consumer packaged goods, education, energy, legal, various service providers, federal governments, and animal health technology and services.
3 Trends Shaping the Future of the Internet Software Industry
Enterprise Software Infrastructure Growing Rapidly: The industry is benefiting from rapid AI adoption, which is driving demand for enterprise software infrastructure. AI-generated code is driving sharp increases in code pushes and platform usage, creating structural demand for DevSecOps platforms that can manage security, governance and deployment at machine scale.
The growing requirement for integrated platforms capable of orchestrating both human developers and AI agents, while maintaining compliance and operational control, is benefiting the industry's prospects. Platform consolidation is becoming increasingly attractive as enterprises seek unified data and AI infrastructure.
Consumption-Based Pricing Gains Traction: The emergence of AI-native pricing models is a key catalyst. The industry players are moving beyond traditional seat-based licensing by introducing consumption-based credits and outcome-driven pricing. The companies are allowing customers to scale usage as AI adoption expands, opening new monetization channels that extend beyond conventional software subscriptions. AI-powered agents, automation and consumption-based pricing are creating incremental revenue streams while increasing customer productivity.
AI Agents & AI-Workloads Create Opportunities: The growing need to secure cloud platforms amid the increasing risks of cyberattacks and hacking drives the demand for web-based cybersecurity software. As enterprises continue to move their on-premises workloads to cloud environments, application and infrastructure monitoring are gaining importance. This is increasing the demand for web-based performance management monitoring tools. AI applications, AI agents and cloud-based AI workloads are expanding the attack surface for businesses, which bodes well for industry participants.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Internet Software industry, placed within the broader Zacks Computer and Technology sector, carries a Zacks Industry Rank #80, which places it in the top 32% of more than 247 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's position in the top 50% of the Zacks-ranked industries is the result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group's earnings growth potential. The industry's earnings estimates for 2026 have moved north by 2.4% since July 31, 2026.
Given the bullish outlook of the industry, there are a number of stocks worth picking for healthy portfolio returns. However, before we present the top industry picks, it is worth looking at the industry's shareholder returns and current valuation first.
Industry Lags S&P 500 and Sector
The Zacks Internet Software industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 Index in the past year.
The industry has dropped 11% over this period compared with the S&P 500's jump of 12.2% and the broader sector's appreciation of 12.1%.
Industry's Current Valuation
On the basis of forward 12-month price-to-sales (P/S), which is a commonly used multiple for valuing Internet Software stocks, we see that the industry is currently trading at 4.03X compared with the S&P 500's 4.55X and the sector's forward 12-month P/S of 5.57X.
Over the last five years, the industry has traded as high as 6.54X and as low as 3.22X, with a median of 4.82X.
3 Internet Software Stocks to Buy Right Now
MongoDB: This Zacks Rank #1 (Strong Buy) stock is benefiting from growing demand for its Atlas cloud database platform, driven by enterprise modernization and increasing adoption of AI applications. You can see the complete list of today's Zacks #1 Rank stocks here.
Growing adoption of Atlas Vector Search, Voyage AI Embeddings and the managed Model Context Protocol (MCP) Server is strengthening MongoDB's position in agentic AI applications. Increasing demand from AI-native companies and frontier AI laboratories is expected to create additional growth opportunities. MongoDB's prospects are benefiting from growing demand for its Enterprise Advanced (EA) solutions, particularly across financial services, technology and government organizations.
MongoDB shares have dropped 33.7% year to date (YTD). The Zacks Consensus Estimate for 2026 earnings has inched up by a penny to $1.04 per share over the past 30 days.
Affirm: Another Zacks Rank #1 company, Affirm is benefiting from growing adoption of its buy now, pay later (BNPL) solutions among online merchants and consumers. The company is currently available on 80 of the top 250 e-commerce websites, highlighting significant opportunities for further merchant penetration. Expanding relationships with major payment service providers, growing merchant integrations and increasing consumer preference for flexible payment options are expected to support gross merchandise volume (GMV) growth.
Affirm's growth prospects are benefiting from increasing adoption of the Affirm Card and expansion into offline commerce. Consumers using the Affirm Card spend approximately twice as much as average Affirm consumers, highlighting the product's potential to drive higher engagement and transaction volumes.
Affirm shares have dropped 48.9% YTD. The Zacks Consensus Estimate for its 2026 earnings is pegged at $13.11 per share, down by a penny in the past 30 days.
Elastic: This Zacks Rank #1 company is benefiting from growing demand for AI-powered search and cybersecurity solutions as enterprises increasingly deploy generative and agentic AI applications. The company's Elasticsearch platform supports text, vector and hybrid search capabilities, enabling organizations to retrieve accurate information from structured and unstructured datasets.
The introduction of VectorDB index mode, Jina embedding and reranking models, and enhancements to Agent Builder is strengthening Elastic's competitive positioning. Growing demand for AI-powered search, enterprise knowledge retrieval and automated security operations is expected to drive subscription revenue growth and customer expansion.
Elastic shares have dropped 16.4% YTD. The Zacks Consensus Estimate for ESTC's fiscal 2027 earnings is pegged at 81 cents per share, unchanged over the past 30 days.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Get all the details here >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.