Forget the software sector's summer slump. While most SaaS names are getting hammered, a few are still wearing life vests. Evercore just named four stocks that could beat the market through year-end: Microsoft, ServiceNow, Salesforce, and Samsara. You heard that right — the same old guard plus a dark horse.
The software index is down 8% since June. Growth is slowing, spending is tightening, and investors are fleeing to AI narratives. But Evercore argues that these four have something the rest don't: pricing power, sticky customers, and a product that actually solves problems.
Microsoft: The AI Magnet
Microsoft is the obvious one. It's the closest thing to a safe haven in tech right now. Azure growth is still chugging along at 22% — not the 30% we saw last year, but enough to make competitors jealous. And with Copilot now embedded in every Office product, the AI tailwind is real. Evercore's analyst Kirk Materne has a $500 price target, up from $450. That's 15% upside. Easy money, if you can stomach the valuation.
The risk? Microsoft is already everyone's top pick. When everybody loves a stock, it rarely outperforms. But maybe that's OK — sometimes you just need a steady ship in a storm.
ServiceNow: The Workflow King
ServiceNow is the quiet compounder. It's not flashy, but it's essential. Every large enterprise uses it to manage IT, HR, and customer workflows. The company just reported a 24% subscription revenue growth, and margins are expanding. Materne thinks the stock could hit $850, implying a 12% gain.
Here's the kicker: ServiceNow's customers aren't leaving. The net retention rate is above 120%. That means existing clients are spending more every year. In a recession-proof-ish business, that's gold. The downside? It's already priced at 40x forward earnings. One miss and the stock gets cut in half. But Evercore is betting on consistency.
Salesforce: The Turnaround That's Stalling?
Salesforce is the wild card. After a brutal 2024, the company slashed costs, fired thousands, and promised margin expansion. It delivered — operating margins hit 22% last quarter. But revenue growth has slowed to single digits. Evercore still sees value, with a $300 target (about 18% upside).
The bull case: Salesforce's Data Cloud and Einstein AI are gaining traction. The bear case: Customers are maxed out on CRM spending. It's a coin flip. But if CEO Marc Benioff can show one more quarter of acceleration, the stock could roar. If not, it's dead money.
“These four companies have pricing power, sticky customers, and products that actually solve problems.” — Evercore analyst Kirk Materne
Samsara: The Dark Horse
Now for the surprise: Samsara. It's not a household name, but it should be. The company makes IoT sensors for fleets and industrial operations. Think connected trucks, temperature monitors, and fuel trackers. Revenue grew 36% last quarter, and the company just turned profitable on an adjusted basis.
Evercore's target is $52, up 25%. The thesis: Samsara is early in a massive market — only 15% of physical operations are digitized. Plus, it's a classic land-and-expand story. Once a customer installs sensors, they keep adding more. The risk? It's not profitable by GAAP standards, and competition from larger players is heating up. But as a high-growth bet in a fading sector, it's intriguing.
What This Means for You
Software stocks are getting crushed because of macro fear, not company-specific problems. If you believe the economy will avoid a deep recession, these four are buys. Microsoft for safety, ServiceNow for steady growth, Salesforce for a potential rebound, and Samsara for a moonshot.
But here's the catch: valuations are still stretched. None of these are bargains. They're just less terrible than the rest. If the market takes another leg down, they'll fall too — just not as hard.
So pick your poison. Or don't. Cash is also a position, and right now it's yielding 5%. But if you're itching to buy software, these four are the least likely to disappoint.
