Software Stocks: Lightning Round
Quick low down on multiple Software names.
Navigating the Software Landscape
The software market is at a wild turning point right now. Some companies are starting to pull ahead as leaders, while others are hitting serious roadblocks. From databases to cybersecurity, the competition is intense, and the stakes are high. Let’s break down what’s going on with $MDB MongoDB, $SNOW Snowflake, $CFLT Confluent, $CRWD CrowdStrike, $DDOG Datadog, and a few others—what’s working, what’s not, and where they could be headed next.
MongoDB Might Be a Steal
Alright, let’s talk about MongoDB. This might be the cheapest valuation we’ve seen for them in a long time—maybe even worse than 2022. Yeah, Atlas is slowing down and margins are under pressure, but that’s only part of the story. I was hesitant at first and even trimmed my position last week, but the more I thought about it, the more it felt like a mistake. So, naturally, I added it back—plus a little extra.
The thing is, MongoDB’s setup for the next few quarters might not be as bad as it looks. Their comps are going to get a lot easier, which could set them up for a decent rebound. If they can manage the margin pressures and keep their database leadership intact, this current dip could be one of those rare chances to grab a quality name on sale.
Snowflake’s AI Play
Snowflake is looking primed to lead the software stage of AI, and honestly, I think it’s just getting started. Now that AI can do more with less compute, the real bottlenecks are in software and network throughput. That’s why I’m bullish not just on Snowflake but also on Broadcom, Marvell, Astera Labs, and Arista Networks. The smaller names in that group might have longer runways, but Snowflake’s focus on software efficiency is the real story here.
The sentiment around Snowflake is trash right now, which, to me, screams opportunity. They just brought in a new CRO and are getting serious about profitability after some heavy CapEx spending. If they can pull this off, we might look back at this period as a massive buying opportunity.
Broadcom and Marvell Look Strong
Network throughput is becoming a major bottleneck as AI adoption takes off. That’s music to the ears of $AVGO Broadcom and Marvell. Broadcom and Marvell are the safer bets here, but Astera Labs and Arista have a lot of upside if they can keep innovating.
$ALAB Astera Labs, in particular, has some serious potential with its smart modules and expanding product line. If they can keep up the momentum, the runway looks long. Meanwhile, $ANET Arista’s data center solutions could benefit massively from the shift to AI-driven workloads.
Confluent Is Surprising Everyone
I’ll admit, I didn’t think Confluent could hold its own against open-source Kafka, but here we are. Last quarter was impressive. They’ve managed to build a strong moat around their managed Kafka services, focusing on cloud-native architectures and seamless integration.
As more companies move to cloud-first strategies, Confluent’s growth could stick around longer than people think. If they keep this up, they might end up being one of the better plays in the data streaming market.
CrowdStrike’s Cash Flow Power
CrowdStrike is doing all the right things. Their free cash flow margins are impressive, and they’re hitting a Rule of 59 score that suggests they’re balancing growth and profitability really well. In a sector as crowded as cybersecurity, that’s not easy.
With AI-driven security threats rising, CrowdStrike’s AI-based model is looking more and more essential. As long as they keep executing at this level, I don’t see any reason why they can’t keep growing—even in a tougher macro environment.
Datadog’s Competition Problem
Datadog is a tough one. I used to be bullish, but the competition is real—especially from SIEM solutions and the hyperscalers pushing their own infrastructure monitoring. Don’t get me wrong, Datadog’s management is top-tier, and they’re still the best of breed. But with the shift from managed infrastructure to managed services and serverless computing, it’s hard to see where Datadog fits in long-term.
They’re going to have to evolve—maybe by focusing more on AI-driven monitoring or expanding their security offerings. The next few quarters should tell us a lot about whether they can keep their edge or if the competition is going to eat into their growth.
Cybersecurity Looks Solid
If there’s one area I want to stay concentrated in, it’s cybersecurity. Companies like $RBRK Rubrik, CrowdStrike, SentinelOne, Palo Alto Networks, and Microsoft if the valuation comes down a bit, all look strong. As AI reshapes both offensive and defensive security, these names should see increasing demand for their solutions.
Microsoft is the wildcard here. Their security business is massive, and if the valuation gets more reasonable, they might be one of the best picks in the space. In the meantime, the focus has to be on companies that can innovate fast enough to stay ahead of AI-driven threats.
Datadog’s Real Risk
One of the biggest risks for software companies right now is slowing ARR growth, and Datadog isn’t immune. Once you’ve gotten everything you can from your current clients, keeping those retention rates high gets a lot harder.
This isn’t just a Datadog problem—it’s something a lot of software companies are facing. As budgets get tighter, finding new ways to grow revenue is going to be a lot tougher. The real challenge for Datadog is figuring out how to adapt quickly and offer higher-value services that actually fit into this new AI-driven landscape.
Final Thoughts
The software landscape is messy right now, but that’s not a bad thing if you know where to look. MongoDB’s valuation looks compelling, Snowflake’s AI play has a lot of upside, and CrowdStrike’s free cash flow is a rare find in cybersecurity. But there are risks everywhere—slowing ARR growth, competitive pressures, and shifting market dynamics.
This is one of those times when you have to balance conviction with caution. Finding the right mix of high-conviction names and risk management is going to be key. As AI continues to reshape the software world, the winners are likely to be those that can adapt quickly without blowing up their margins.