With many software stocks down 25%+ from their highs, it may be time to consider buying. That’s the view of analysts at JP Morgan, who recently said that the decline in this area of the market is excessive and driven by AI disruption fears that are unrealistic.
Here, I’m going to highlight three software stocks that JP Morgan highlighted in its research note as Buys. Are they worth considering today?
Microsoft
Let’s start with mega-cap Microsoft (NASDAQ: MSFT). It has fallen to $400 after trading near $550 in late 2025.
I like this pick. To my mind, this company is one of the safer picks in software.
Why? Because it’s a really diversified business.
Not only is it a key player in business productivity software, but it’s also a global leader in cloud computing and video gaming.
Additionally, it’s a massive player in AI itself. Because it has a large stake in ChatGPT owner OpenAI.
Of course, there are risks. One big one is that a lot of its expected cloud growth is tied to OpenAI (customer concentration risk).
With the stock now trading on a forward-looking price-to-earnings (P/E) ratio of 21 (using next year’s earnings forecast) though, I’m bullish. I plan to buy more shares for my own portfolio soon and believe it’s worth a look.
ServiceNow
Next up is ServiceNow (NYSE: NOW). It has fallen from $200 to $100.
This is another good call, in my view. While this company isn’t very well known, it’s a really important player in the corporate world.
Today, it provides crucial operating software for a vast range of large companies (85% of the Fortune 500). From Apple to GSK, everyone is using its software.
In simple terms, it handles all the behind-the-scenes work. Think IT incidents, employee requests, and security cases.
Given how embedded its solutions are within large multinational companies, I doubt this company is going to be replaced by AI. Ultimately, I expect AI agents to work on top of its software.
A risk is pricing. Looking ahead, the group may have to adjust its pricing model as companies automate their operations and lay off staff.
I expect it to continue growing though. And with the P/E ratio now in the low 20s, I think it’s worth considering.
Zscaler
Finally, we have Zscaler (NASDAQ: ZS), a small, but fast-growing cybersecurity company. Its share price has fallen from $330 to $165 – a decline of about 50%.
Cybersecurity strikes me as an area of software that should be relatively immune to AI disruption. Because this is a really specialised field and I don’t think that companies will be able to simply ‘vibe code’ their own cybersecurity applications.
To my mind, it wouldn’t be worth the risk. Get it wrong and the company could potentially be out of business if hit by a major attack.
Of course, while this company has been able to generate prolific growth in recent years (five-year revenue growth of 520%), there are no guarantees that this will continue. This is a dynamic industry and threats are likely to evolve over time.
Any slowdown could hit the share price. Because the stock is priced for strong growth.
I’m bullish, however, and plan to buy more shares for my own portfolio in the weeks ahead. In my view, it’s worth a closer look.
