US Software Stocks Divergence Intensifies: AI Infrastructure Stocks Up, Traditional SaaS Under Pressure

Barclays' latest research indicates that the US software sector is showing a clear divergence pattern in this earnings season, with companies directly linked to AI infrastructure leading the way, while traditional SaaS front-end application software continues to face pressure.

Barclays analyst Raimo Lenschow points out in the weekly summary released on May 8, "We are witnessing the beginning of a greater degree of divergence in the software sector, with investors selectively returning to this track, and the core criterion seems to be revenue growth rate."

AI beneficiaries take the lead, sentimental stocks follow

The most prominent winners of this earnings season are Datadog (DDOG) and DigitalOcean (DOCN). Datadog Q1 achieved all-round revenue and guidance above expectations, with AI-Observability demand accelerating; DigitalOcean significantly raised its FY2027 growth guidance to over 50%, driven by the continuous expansion of AI inference service capacity.

Atlassian (TEAM) and Five9 (FIVN) reaping benefits from extremely negative market sentiment previously — after solid performance is fulfilled, the stock price flexibility exceeds the data itself.

At the same time, HubSpot and Klaviyo are still under intense market scrutiny. Klaviyo Q1 revenue maintained a year-over-year growth rate of 28%, but seasonal underperformance led to the stock price dropping to the bottom of this earnings season. Barclays points out that the stock price volatility of such companies is not commensurate with the performance deviation itself, but more reflects the market's emotional pricing on AI replacement risk.

Three individual stock signals worth paying attention to

Barclays "righting a wrong" for Oracle (ORCL): The company is transforming from traditional software to an AI computing power provider, and the OCI business will become the main engine of revenue in the future, but the stock price is incorrectly priced due to being categorized under the "software" sector, maintains buy, target price of $240.

Fortinet (FTNT) saw its Q1 billing amount increase to 31% year-on-year and raised its full-year guidance, but Barclays is cautious about whether the better-than-expected results contain front-loaded consumption, warning of the risk of historical reenactment.

ServiceNow (NOW) analysts released their FY2030 targets, with subscription revenue between $30-32 billion and Rule of 60+, effectively alleviating market concerns about AI impact narratives.

Barclays maintains a "positive" industry rating for the US software sector, believing that the divergence in this earnings season is the first positive sign that the sector is attracting selective capital attention once again. This week will see the release of results from Monday.com (before the market opens on Monday), ZoomInfo (after the market closes on Monday), Dynatrace and SimilarWeb (before the market opens on Wednesday), and the trend of the sector will further verify whether the aforementioned divergence logic continues.