7 Software Stock Predictions for 2023

Technology investors will have a lot to predict in software stocks before the end of this year. Between hardware and software, the bear market sent both sub-sectors lower. However, software companies are more attractive because they have lower variable costs. From a macro viewpoint today, the economy is in recession. By the end of the year, the slowdown will worsen. In 2023, companies will reset their budgets for the new year. They cut costs on things that don’t increase efficiency. Conversely, software firms will offer products that increase company productivity and drive sales.

Here are some of the top technology stocks to consider.

ADSK	Autodesk	$197.85
CRWD	CrowdStrike	$153.39
DDOG	Datadog	$79.07
NOW	Service Today	$355.16
OCT	Okta	$54.92
ORCL	Oracle	$66.28
ZS	Zscaler	$147.72

Autodesk (ADSK)

Autodesk (NASDAQ:ADSK) announced a strategic partnership with Epic Games on Sept. 27. Both companies will develop immersive real-time environments. End users in the ICE sector can deliver more innovative projects in less time.

Autodesk’s Head of Construction Strategy, Sidharth Haksar, said that after the pandemic, business is back to normal. In addition, the company spoke with customers to confirm that backlogs remained stable. Moving forward, Autodesk expects the construction industry to embrace the digitalized industry. The construction market has many work streams. Expect the company to promote connected workflow by 2023. Inflation increases the cost of resource waste in a project. Its customers will accelerate its implementation of Autodesk software to maintain its operating margins.

In the second quarter, Autodesk posted revenue growing 17.0% Y/Y to $1.24 billion. Total bookings rose 17% to $1.19 billion.

CrowdStrike (CRWD)

CrowdStrike (NASDAQ:CRWD) will thrive next year as demand for cybersecurity increases. Last month, the company announced it would acquire Reposity Ltd., which provides an external attack surface management platform. It protects organizations by scanning the Internet for exposed assets. As a result, it should help de-risk vulnerable assets before attackers can exploit the vulnerability. Also, in 2020, CrowdStrike acquired Preempt Security, which helps protect customers from attacks that use compromised identities and lateral movement.

In the last quarter, Crowdstrike added 1,741 new customers (or number of new logos). As it has a strong Trusted Managed Security Service Provider business, expect accelerated revenue growth. Crowdstrike has the opportunity to add new customers and add new businesses. Investors should accumulate CRWD stock through 2023.

Datadog (DDOG)

Datadog (NASDAQ:DDOG) offers an observability service for cloud-scale applications. With more and more corporations relying on Software-as-a-Service (SaaS), they need enterprise server monitoring solutions.

The company’s CFO David Obstler said that five years from now, Datadog will benefit as customers move their workloads to the cloud and digital applications. Currently, they are in the early stages of this transition. The company wants to centralize its platform for DevOps professionals. DevOps is a set of skills that integrates software development with IT operations. Clients will recognize the value-add from Datadog over time. The software firm will add functionality to the platform, increasing the cost of working on its platform. Furthermore, technical clients will communicate and collaborate within Datadog’s DevOps.

ServiceNow (NOW)

Service Today (NYSE:NOW) developed a cloud computing platform. Customers manage their technology-based workflow to develop applications. President and CEO Bill McDermott says the company will have 750 million new applications built on low-code platforms in the next two years.

The low-code revolution is very different from the complex software platforms of the past. ServiceNow offers business agility by helping customers navigate to update applications. With inflationary pressures, customers will look for cloud platforms that can help their companies save money.

ServiceNow has a German auto manufacturer that deals with 30 million parts. Its operations include 4,000 suppliers. It facilitates supply chain management in real time on a low-code platform.

Investors can take advantage of the decline in NOW shares. In the second quarter of 2022, the company posted total revenue of $1.75 billion, up 24% from last year. Subscriptions grew 25% Y/Y. The stock traded lower after the report as investors expected a stronger outlook for full-year subscription revenue.

Okta (OKTA)

Okta (NASDAQ:OCT) is in a downtrend as investors worry about its weak outlook. In the second quarter, the identity and access management provider posted Q2/2023 revenue of $452 million. Subscription revenue was $435 million of the $452 million posted in the period.

Identity management continues to cycle from on-premises to the cloud. For example, workers were previously connected to a Microsoft Windows network in Microsoft Active Directory. Today, companies want Okta’s privileged system. It protects their database and data center accounts. Okta offers a central system that manages three things: access management, privileged access, and identity management.

More companies will move their services online. They needed an easier way to manage staff access. With Okta, technology staff can automate the creation, modification, and recovery of user accounts. By 2023, identity management could be closer to a “passwordless” world. To get there, customers will consider implementing Okta’s solution first.

Oracle (ORCL)

Oracle (NYSE:ORCL) recently acquired Cerner Corp., a provider of health information technology services. In the last quarter, Cerner contributed to Oracle’s cloud revenue of $3.6 billion. In the current second quarter, Oracle expects total revenue to grow 21%. Its cloud is the biggest contributor to growth. Oracle expects the cloud unit to grow 46% from last year.

The multi-cloud era has begun. Customers purchase applications and cloud infrastructure from multiple vendors including Oracle. The company embraces multi-cloud interoperability. This mindset strengthens Oracle’s overall cloud business capabilities.

Oracle is the only infrastructure company that builds enterprise-scale applications. As a result, it offers secure applications at the infrastructure layer. Customers need more secure systems that are easy to operate. This improves their productivity while Oracle protects their data.

The company’s database works in multiple clouds. For example, it works with AWS, HeatWave, and MySQL. Flexibility increases Oracle’s competitiveness as it boosts its growth rate to 2023.

Zscaler (ZS)

Zscaler (NASDAQ:ZS) spooked investors on October 11, when its president, Dr. Amit Sinha to join a private tech firm as CEO.

The company’s architecture suits the security problems faced by corporations in 2022. It protects its customers from security threats at the data and application level. In addition, it appeals to clients who want more than firewall and virtual private network security.

Zscaler designs security solutions around cloud and mobility. The solution is like a switchboard that connects each critical application to the others. Expect the company to increase its marketing efforts to improve awareness of its product. Once it convinces CIOs and chief technology officers about its infrastructure, it will win more deals by 2023.

If the economy enters a recession, corporations will not cut innovation projects. This is a multi-year effort that is a high priority. Zscaler addresses not only security but high availability for online applications.

As of the date of publication, Chris Lau does not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writers, subject to InvestorPlace.com’s Publishing Guidelines.

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