2 Tech Stocks Worth Holding for the Long Haul and 1 We’d Skip

The Evolving Landscape of Software Companies

Software continues to transform industries worldwide, leaving few businesses unaffected by its reach. Previously, the strong momentum behind SaaS firms resulted in high valuation multiples, making it easier for these companies to secure funding. However, these elevated valuations also increased vulnerability to market corrections. Over the past six months, the software sector has declined by 4.6%, a stark contrast to the S&P 500’s 10.8% gain during the same period.

Given this volatility, investors should proceed with caution. While some software companies are poised for significant earnings growth, others risk being overtaken by competitors and advances in artificial intelligence. With that in mind, here are two robust software stocks worth watching, along with one that may face headwinds.

Software Stock to Consider Selling

Strategy (MSTR)

Market Capitalization: $47.68 billion

Strategy (NASDAQ:MSTR) began as a business intelligence software provider but has since shifted its focus to AI-driven analytics solutions. The company is also notable for its substantial holdings in Bitcoin, positioning itself as a major corporate investor in cryptocurrency.

Reasons for Caution with MSTR

• The company’s primary analytics offerings have taken a back seat to its aggressive Bitcoin acquisition strategy, resulting in less emphasis on product development and enterprise partnerships.
• By financing Bitcoin purchases with debt, MSTR exposes shareholders to increased risks tied to cryptocurrency price swings and fluctuating interest rates.
• On the positive side, its large Bitcoin reserves provide Executive Chairman Michael Saylor with a unique opportunity to benefit from potential gains in digital assets and attract investors seeking leveraged crypto exposure.

Currently, Strategy shares are priced at $165.27, reflecting a forward price-to-sales ratio of 106.8.

Two Promising Software Stocks

HubSpot (HUBS)

Market Capitalization: $20.74 billion

HubSpot (NYSE:HUBS) was founded to address the declining effectiveness of traditional marketing methods. The company offers a comprehensive platform that enables businesses to attract, engage, and nurture customer relationships through integrated marketing, sales, service, and content management tools.

Why HubSpot Stands Out

• HubSpot has achieved an average billings growth of 19.8% over the past year, signaling a strong influx of new contracts that should support ongoing revenue expansion.
• Projected revenue growth of 16.5% over the next year suggests the company’s recent momentum is likely to continue.
• Its software is challenging to replicate at scale, resulting in an impressive gross margin of 84.1%.

HubSpot shares are trading at $394.48, equating to a forward price-to-sales ratio of 5.7. Wondering if it’s the right time to invest?

Palo Alto Networks (PANW)

Market Capitalization: $129.5 billion

Established in 2005 by cybersecurity pioneer Nir Zuk, Palo Alto Networks (NASDAQ:PANW) delivers advanced AI-driven security platforms that safeguard networks, cloud environments, and endpoints from complex cyber threats.

What Makes PANW a Strong Contender

• The company’s rapid return on sales and marketing investments enables it to scale quickly and acquire numerous customers simultaneously.
• Palo Alto Networks boasts a solid operating margin of 13.2%, reflecting its efficient business model. This margin has improved over the past year, partly due to leveraging fixed costs.
• A robust free cash flow margin of 38.6% provides the company with significant flexibility for capital allocation.

With shares priced at $185.87, PANW’s forward price-to-sales ratio stands at 11.9. Interested in learning more?

Top Stocks for Any Market Environment

Discover the standout companies featured in our Top 5 Growth Stocks for this month. This handpicked selection of High Quality stocks has delivered a remarkable 244% return over the past five years (as of June 30, 2025).

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