Mizuho Top Software Stocks 2026: Cloudflare, ServiceNow, and Atlassian Rated Outperform Before Q1 Earnings

TLDR

• Mizuho named Cloudflare, ServiceNow, and Atlassian as its top software picks ahead of Q1 earnings
• Application software stocks in Mizuho’s coverage have dropped an average of 61% over the past year
• NTM EV/Sales multiples are 40% below three-year average levels, which Mizuho calls attractive risk/reward
• Cloudflare’s recent 13% selloff following the Claude Managed Agents announcement is seen as overdone
• Price targets were cut across the board, including Microsoft, Palantir, Check Point, and Datadog

Mizuho analysts have picked Cloudflare, ServiceNow, and Atlassian as their top software stocks to watch going into the first-quarter earnings season. The bank says its industry checks show solid consumption and AI adoption trends, even as valuations across the software sector have fallen sharply.

The report, led by analyst Gregg Moskowitz, was published Tuesday. It comes at a difficult time for software stocks broadly.

Application software stocks covered by Mizuho have fallen an average of 61% over the past year. Infrastructure software edged up just 1% on average, while cybersecurity names dropped 22%.

Mizuho pointed to AI disruption fears as a key driver of the selloff. The firm noted that SaaS stocks have underperformed infrastructure software by about 40 percentage points since February 2025.

Valuations across the sector have reset. Mizuho said NTM EV/Sales multiples are now 40% below their three-year average. The firm called the current risk/reward “quite attractive” over the next twelve months, while warning of a “rocky path” ahead.

Cloudflare

Cloudflare was described as having “favorable” checks for the quarter. Mizuho expects another quarter of revenue growth above guidance and a fourth straight quarter of revenue acceleration.

Cloudflare, Inc., NET

The stock fell 13% after Anthropic’s Claude Managed Agents announcement last Tuesday. Mizuho called that drop “overdone” and kept its Outperform rating, though it cut the price target to $235 from $255.

ServiceNow

ServiceNow’s Q1 checks showed better-than-expected large-deal activity, according to Mizuho. The firm said Pro Plus adoption is growing at a solid rate.

Agentic AI solutions through assist packs are gaining traction in the channel, though Mizuho said it remains early. The firm expects ServiceNow to beat its guidance of 20% year-over-year constant currency cRPO growth.

Mizuho kept its Outperform rating but trimmed the price target to $150 from $190. The stock currently trades at around 12x CY27 estimated free cash flow.

Atlassian also held its Outperform rating. Mizuho cut its price target to $145 from $185 but still expects meaningful subscription revenue acceleration for a second straight quarter.

The firm noted that lower partner margins implemented several months ago may have limited what the channel checks captured. Despite that, Atlassian’s checks came in better than some competitor results.

Mizuho also cut price targets on several other names in its coverage. Check Point was lowered to $165 from $205. Microsoft was reduced to $515 from $620. Palantir was trimmed to $185 from $195. Datadog was cut to $145 from $170.

The bank’s overall tone on software was cautious but not bearish. It said public cloud and consumption trends were “generally good” and AI adoption was “very strong” in Q1 checks.

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