Morgan Stanley Flags 5 Software Stocks With Solid Q3 Traction

Morgan Stanley has zeroed in on five software firms that are shaping up to be key players heading into the third quarter of 2025, spotlighting how artificial intelligence and cloud tech continue to steer the sector's best performers. This group isn't just riding the current wave; they're carving paths for sustainable expansion in coming years.

Leading the charge, Snowflake (NYSE: SNOW) boasts an anticipated 30% bump in product revenue for Q3, with Q4 guidance eyeing 26-27% year-over-year growth. Demand for their data warehousing solutions remains robust, and despite the stock trading at about 15 times calendar year 2027 revenue, Wall Street analysts keep faith in Snowflake's stay-power, especially with its recent collaboration with NVIDIA to turbocharge machine learning workflows.

Elastic (NYSE: ESTC) is making waves in the AI Search and retrieval arena, with an expected 17-18% revenue growth on a constant currency basis. Although AI search's full revenue impact is still ramping up, partners confirm more projects are hitting production floors, which could accelerate growth momentum. At roughly 5.0x CY26 sales, Elastic's valuation feels intriguing in this environment.

MongoDB's (NASDAQ: MDB) story is one of steady progress, with 17-18% total revenue and close to 30% Atlas revenue growth anticipated in Q3. Deal flows have picked up since Q2, and the database provider is carving out an edge with AI use cases like Voyage AI. Even with the share price rallying over 60% this year, analysts seem confident that MongoDB's enterprise footprint will keep expanding, alongside improving free cash flow metrics. A change in leadership is also in motion, with CEO Dev Ittycheria retiring and Chirantan "CJ" Desai stepping in.

GitLab (NASDAQ: GTLB) is forecasted to grow revenues around 25-26% year-over-year in Q3, slightly beating consensus expectations. Despite a bumpy ride for the stock, including some investor jitters about #AI competition, Morgan Stanley sees those fears as a bit blown out of proportion. Industry chatter points to consistent operational performance, and with shares discounted, GitLab's positioning could be better than meets the eye.

Rounding out the list, UiPath (NYSE: PATH) projects about 11% growth in annual recurring revenue. Still, some pressure on growth metrics is apparent, as many AI product offerings remain in the "conversational" phase rather than full deployments. Partnerships with OpenAI and integrations with Azure AI Foundry signal serious ambitions in enterprise automation, but the jury's out on concrete monetization pathways for now.

This crop of software stocks shows varied but solid signs of strength going into Q3, anchored in cloud infrastructure and AI innovations. Whether the broader market momentum can sustain these technology bets remains to be seen, but these five names give plenty to chew on, especially as fresh data points roll in.