Jefferies says these 4 software stocks screen well in IT exec survey

Investing.com -- Microsoft, Amazon Web Services, Palo Alto Networks and ServiceNow emerged as the strongest performers in a Jefferies survey of 40 IT executives, it was revealed on Friday.

A note from the firm also said that Adobe registered a sharply negative read-through as AI pressure weighs on incumbent application software vendors.

Jefferies analyst Brent Thill said the survey showed accelerating software budgets, with CIOs expecting 6.2% growth in 2026 versus 4.8% in 2025.

"83% of respondents expect software budgets to increase in CY26, while only 5% expect a decline," the bank said, describing a constructive demand backdrop despite negative investor sentiment toward the sector.

On AI spending, Jefferies said "tokenmaxxing is real," with approximately 68% of CIOs now holding a dedicated AI budget and 73% reporting that year-to-date token and API spend is tracking above initial expectations.

The bank characterized the dynamic as "a pragmatic scaling phase, not a pullback," noting 38% of respondents plan to raise AI budgets to support higher usage.

Microsoft was said to be the standout, with 85% of CIOs expecting to spend more in 2026 and none planning to spend less. AWS posted a 44% net score, Palo Alto Networks 53% and ServiceNow 47%.

Adobe was the clear laggard, with only 11% of respondents expecting slightly higher spend, while 38% expect lower, producing a net score of negative 27% versus flat in the prior survey.

Jefferies said the result is "consistent with investor concerns around AI pressure on creator technology."

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