"Software stocks have split into two camps in 2026. The winners are printing money with expanding margins and accelerating growth. The losers are treading water despite solid execution. What separates them? Profitability at scale, not just revenue growth. The market is done rewarding unprofitable expansion. It has started paying premiums for companies that convert dominance into actual earnings power. We ranked the top five software stocks by weighing profitability metrics, revenue growth, and competitive positioning."
"Fortinet ( NASDAQ:FTNT) delivers the highest return on equity in software at 228%. The cybersecurity specialist converts every dollar of shareholder capital into $2.28 of profit. With a 32x P/E ratio, 14.4% revenue growth, and 28.6% profit margins, Fortinet represents the old guard of cybersecurity executing at peak efficiency. The stock is down 17% over the past year, trading at $78.80, but business fundamentals remain rock solid."
Software stocks split into winners producing expanding margins and accelerating growth and losers treading water despite solid execution. Profitability at scale, not only revenue growth, separates winners from losers. Markets have stopped rewarding unprofitable expansion and now pay premiums for companies that convert market dominance into actual earnings power. Top software companies combine high revenue growth with strong profit margins and durable competitive positioning. Fortinet shows 228% return on equity, 14.4% revenue growth, 28.6% profit margins and 31.7% operating margins. Intuit delivered 41% revenue growth and 543% EPS growth from fiscal 2015 to 2024.
Read at 24/7 Wall St.
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