Two Software Stocks to Buy Before Share Prices Climb High

Two software stocks to buy before share prices climb high include one of the industry giants as well as another that has promising outlooks.

The two software stocks to buy so far have not shown much fallout from the tariffs and retaliatory that have been in the headlines lately. Citigroup recently reported that tariffs have not caused much if any impact so far on the spending of software customers.

However, a few Canadian companies with potential supply chain risks (e.g., exposure to cost of steel) have paused evaluations or additional commitments until they gain further clarity on the situation, Citigroup counseled.

“The budget environment for front-office technology spend remains tough and customers/prospects remain price-conscious,” Citigroup reported. “However, we also heard some green shoots and cautious notes of optimism, with certain platforms expecting a better growth year than 2024 and feeling more optimistic about the outlook for retail tech spend.”

Two Software Stocks to Buy Before Share Prices Climb High: MSFT

Redmond, Washington-based software giant Microsoft Corporation (NASDAQ: MSFT), already is up 13.95% since its recommendation in the TNT Trader advisory service on April 1. The company announced financial results last week that handily topped analysts’ estimates, notching higher-than-expected results on both the top and bottom lines, the TNT Trader advisory added.

Mark Skousen leads the Forecasts & Strategies investment newsletter and TNT Trader.

Microsoft officials also told investors that the company’s capital expenditures in artificial intelligence (AI) infrastructure were leading to increases in future revenues. Company officials reiterated their plans to continue investing in AI infrastructure.

TNT Trader advised selling half the Microsoft call options the service had recommended for a whopping 170% gain in just one month. The stock’s 14% rise since its recommendation suggests it will move higher despite market volatility, Skousen added.

“We have always felt Microsoft was more immune than most companies to tariffs, and we are seeing it do better than others,” TNT Trader continued.

Chart courtesy of stockcharts.com.

Two Software Stocks to Buy Before Share Prices Climb High: Azure Update

“We expect stock to trade up given stronger Azure (AI and Non-AI) growth trajectory even with continued capacity constraints,” Citigroup wrote in a recent research note.

Microsoft had an “exceptional quarter,” beating projections for its cloud computing Azure platform, better-than-expected AI demand, continued strong bookings and a strong profitability, Citigroup reported. Non-AI workloads drove the majority of the Azure ourperformance, particularly among large customers, Citigroup added.

Guidance was also promising, with Azure growth of 34-35% year over year compared to consensus estimates of 32%, Citigroup wrote. Microsoft officials indicated they expect demand to outstrip supply for longer than they anticipated.

“We expect the stock to trade up on the Azure growth trajectory and see positive read-throughs for other consumption names,” Citigroup wrote. “With better growth/AI revenue at scale at MSFT, we remain buyers.”

Two Software Stocks to Buy Before Share Prices Climb High: CRM

San Francisco-based Salesforce Inc. (NYSE: CRM) is a software company that has emerged as a leader in “agentic AI,” using the technology to replace human employees. The company’s “Agentforce” product was launched in 2024.

So far, Salesforce has closed 5,000 deals and has addressed almost 400,000 queries with only 2% requiring a live agent solution.

The use of this product means less employee labor and higher return on investment (ROI) for the customers, said Michelle Connell, a CFO who is president and owner of Dallas-based Portia Capital Management, LLC.

While CRM’s AgentForce has Microsoft and Santa Clara California-based Oracle Corporation (NYSE: ORCL) as competitors, they’re competing products are for general tasks. They don’t specifically address CRM or customer relationship management issues, Connell continued.

Chart courtesy of stockcharts.com.

Two Software Stocks to Buy Before Share Prices Climb High: Connell’s Counsel

Connell counseled:

-The company has invested a lot in this product group and has been willing to accept sales in other product groups to focus on this.

-In return, profit margins are expected to stay very strong and potentially grow into the 40% range.

-The company’s data cloud and artificial intelligence product sales more than doubled in the fiscal year ending in January.

-Nearly half of fortune 100 companies use both CRM’s data cloud and AI products.

-The company’s top 10 wins have included both product groups.

-A potential negative is that 48% of company sales are made through subscriptions on a per seat basis. This could cause weakness if there’s an economic slowdown.

-Free cash flow has been strong: for the fiscal year ending this January, free cash flow was over $12 billion. That was a 30% increase compared to the previous year.

“This would be a compelling time to create a position in the stock,” Connell added. “It’s 25% off its January high and still down 18% year to date.”

Two Software Stocks to Buy Before Share Prices Climb High: Geopolitical Risk

Investors must pay attention to geopolitical risk that extends from tariffs to wars. On Tuesday, May 6, India announced it had launched an attack on nine sites in Pakistan and Pakistan-administered Kashmir as a retaliation.

Both India and Pakistan are nuclear-armed nations whose relations deteriorated following a deadly militant attack on tourists in Kashmir last month. President Trump commented that the nations have been engaged in conflicts for decades, if not centuries, and he expressed hope that situation would not escalate.

However, Russia continues to hold back on allowing President Trump to broker a ceasefire from the invading nation’s three-year-old attack against Ukraine. Human rights monitors of the United Nations documented a high intensity of attacks across Ukraine in April, according to the international organization with 193 member states.

In the early hours of April 24, Russia launched a large-scale, coordinated attack on Kyiv, the Capitol of Ukraine. Russia also fired powerful munitions and missiles at eight other regions of the country, requiring the hospitalization of 44 people, the UN reported.

“In one Kyiv location, a powerful missile directly struck a two-story residential building, razing it to the ground,” according to the United Nations. “Emergency workers continue rescue operations to reach people — possibly children — trapped beneath the rubble. Fires broke out across the city due to falling debris from intercepted missiles.

“Similar attacks occurred overnight in several regions, including Kharkiv, Dnipropetrovsk, Zhytomyr, Zaporizhzhia and Kyiv, injuring civilians. The scenes of destruction and suffering in Kyiv… reflect a deeply disturbing trend — civilians bearing the brunt of ever more intense and frequent attacks,” said Danielle Bell, head of the UN Human Rights Monitoring Mission in Ukraine (HRMMU).

Between April 1 and 24, Ukraine verified 848 civilian casualties, with 151 killed and 697 injured, a 46% increase compared to the same period last year, according to the UN. The verification process is still ongoing, with casualty numbers expected to rise, it added.

In addition to the military combat there and elsewhere in the world, tariffs add to investment risk. A baseline 10% tariff that went into effect on April 5 still remains in place for all affected imports into the United States. President Trump has expressed readiness to negotiate with other heads of state. Market observers are watching whether new trade agreements can be reached and how quickly.

Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.