Top Goldman Sachs analyst Gabriela Borges has begun coverage of the U.S. software sector, telling investors that AI is entering a “decade of agentic workflow.” The firm named Microsoft (MSFT), Oracle (ORCL), and ServiceNow (NOW) as its top Buy-rated stocks, while warning that Adobe (ADBE) and Datadog (DDOG) may face pressure as not all companies are set to benefit equally.
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What Stocks Does Goldman Sachs Recommend?
Goldman’s top pick is Microsoft, which it calls its highest-conviction idea. The firm sees upside to Azure revenue in 2026, supported by Microsoft’s scale and a disciplined focus on growing the business while protecting margins.
Oracle also earned a Buy rating, with Goldman pointing to improving visibility on spending and a likely rebound in profit growth by 2026. The bank is positive on Oracle’s position in AI-driven cloud workloads and expects growth to pick up as new data center capacity comes online over the next year.
The third Buy-rated stock is ServiceNow, which Goldman sees as a key winner as value shifts toward the “agent orchestration” layer of software. The firm believes ServiceNow’s workflow platform and AI tools put it in a strong position to sustain solid growth, while expanding into areas such as CRM, ERP, and human capital management.
Why Goldman Sachs Turns Cautious on Adobe and Datadog
Goldman Sachs was more cautious on some software names, assigning Sell ratings to Adobe and Datadog. The firm warned that most new growth in the creative software market is happening at the lower end, where competition is rising and pricing pressure is increasing. It also noted that Adobe faces challenges in attracting new users, which could limit its ability to sustain double-digit growth.
Goldman is also bearish on Datadog, warning that tougher competition could weigh on growth. Borges said that while Datadog remains a strong observability platform, competition is expected to intensify in 2026 as customers focus more on cutting cloud monitoring costs. She added that rising AI-driven data volumes and pressure from rivals could slow revenue growth and weigh on the stock’s valuation.
Wall Street’s Take on These 5 Software Stocks
Let’s see how these five stocks perform using the TipRanks Stock Comparison Tool:
