1 Software Stock to Own for Decades and 2 We Find Risky
Software is rapidly reducing operating expenses for businesses. Companies bringing it to life have been rewarded with high valuation multiples that make fundraising easier, but they have capped returns lately as the industry was flat over the past six months and trailed the S&P 500’s 13.3% gain.
Investors should tread carefully as only some businesses are worthy of their valuations, and luckily for you, we started StockStory to help you find them. With that said, here is one software stock boasting a durable advantage and two we’re steering clear of.
Two Software Stocks to Sell:
Akamai Technologies (AKAM)
Market Cap: $12.78 billion
With a massive distributed network spanning 4,100+ points of presence in nearly 130 countries, Akamai Technologies (NASDAQ:AKAM) provides a global distributed cloud platform that helps businesses deliver, secure, and optimize their digital experiences online.
Why Should You Sell AKAM?
- Annual revenue growth of 5.1% over the last two years was well below our standards for the software sector
- Gross margin of 59.1% is way below its competitors, leaving less money to invest in areas like marketing and R&D
- Extended payback periods on sales investments suggest the company’s platform isn’t resonating enough to drive efficient sales conversions
Akamai Technologies’s stock price of $88.79 implies a valuation ratio of 3x forward price-to-sales. Check out our free in-depth research report to learn more about why AKAM doesn’t pass our bar.
ZoomInfo (GTM)
Market Cap: $3.15 billion
Operating a platform it calls "RevOS" - short for Revenue Operating System - ZoomInfo (NASDAQ:GTM) provides sales, marketing, and recruiting teams with business intelligence and analytics to identify prospects and deliver targeted outreach.
Why Do We Think GTM Will Underperform?
- Products, pricing, or go-to-market strategy may need some adjustments as its 1% average billings growth over the last year was weak
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Operating margin increased by 5.1 percentage points over the last year as it refined its cost structure
ZoomInfo is trading at $9.83 per share, or 2.6x forward price-to-sales. To fully understand why you should be careful with GTM, check out our full research report (it’s free for active Edge members).
One Software Stock to Buy:
CrowdStrike (CRWD)
Market Cap: $120.3 billion
Known for detecting the massive SolarWinds hack in 2020 that compromised numerous government agencies, CrowdStrike (NASDAQ:CRWD) provides cloud-based cybersecurity solutions that protect endpoints, cloud workloads, identity, and data through its Falcon platform.
Why Should You Buy CRWD?
- Average billings growth of 24% over the last year enhances its liquidity and shows there is steady demand for its products
- Estimated revenue growth of 22.1% for the next 12 months implies its momentum over the last two years will continue
- User-friendly software enables clients to ramp up spending quickly, leading to the speedy recovery of customer acquisition costs
At $476.29 per share, CrowdStrike trades at 21.6x forward price-to-sales. Is now the time to initiate a position? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today.