StockStory has identified Palantir Technologies (NASDAQ:PLTR) as a software stock poised to generate sustainable market-beating returns, while identifying Qualys (NASDAQ:QLYS) and Procore Technologies (NYSE:PCOR) as companies that may face trouble. The analysis comes as the broader software industry posts a 45.2% gain over the past six months, outperforming the S&P 500 by 28.9 percentage points, yet the firm notes that fierce competition driven by low barriers to entry means only a handful of firms will thrive long-term.
Palantir Technologies, with a market cap of $456.7 billion, develops software platforms for government agencies and enterprises to integrate and analyze data. The firm highlights that billings growth has averaged 76.7% over the last year, indicating a healthy pipeline of new contracts expected to drive future revenue increases. Additionally, fast payback periods on sales and marketing expenses allow Palantir to invest heavily and onboard many customers concurrently. The company is described as a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders. At a stock price of $190.60, Palantir trades at a valuation ratio of 47.2x forward price-to-sales.
In contrast, StockStory views Qualys, a provider of cloud-based IT security platforms with a market cap of $6.48 billion, as falling short. ARR growth for Qualys averaged a weak 10.3% over the last year, suggesting competition is pulling attention away from its software. Anticipated sales growth for the next year is 8.9%, which implies shaky demand. While operating margin expanded by 3.4 percentage points over the last year due to scaling and efficiency, the firm argues there are better opportunities than Qualys. The stock trades at $187.55 per share, or 8.6x forward price-to-sales.
Procore Technologies (NYSE:PCOR), which provides cloud-based construction project management software, also faces caution from the analysts. With a market cap of $7.85 billion, Procore's estimated sales growth for the next 12 months is 13.4%, implying demand will slow from its two-year trend. The firm points to a suboptimal cost structure highlighted by a history of operating margin losses. Procore trades at $52.18 per share, representing a 4.9x forward price-to-sales multiple.
The firm’s broader strategy focuses on revenue growth as a key indicator for major stock winners. It notes that top performers like Meta, CrowdStrike, and Broadcom all exhibited rapid revenue growth before their respective runs of 315%, 314%, and 455%. Stocks on its list in 2020 included Nvidia, which returned 1,460% between June 2020 and June 2025, and Comfort Systems, which returned 1,154% over the same period.