Key Points
- Goldman Sachs has issued new ratings for the U.S. software sector.
- The bank is bullish on Microsoft, Oracle, and ServiceNow, rating them as “Buys.” It has “Sell” ratings on Adobe and Datadog.
- The firm believes we are entering the “decade of agentic workflow,” driven by AI.
- The key to success will be turning AI infrastructure demand into a profitable business.
Goldman Sachs has just released its new outlook for the U.S. software sector, and the bank is making some big calls about who will win and who will lose in the age of artificial intelligence. The firm is bullish on Microsoft, Oracle, and ServiceNow, but it’s telling investors to sell Adobe and Datadog.
The bank’s analysts believe we are entering the “decade of agentic workflow,” where AI will fundamentally change how businesses operate. They are optimistic that AI adoption will be a major tailwind for the software industry over the next five to ten years.
The big question, they say, is which companies can turn the massive demand for AI infrastructure into a “sustainable, profitable business.”
Microsoft is Goldman’s top pick. They are particularly excited about the company’s Azure cloud business and believe it has significant growth potential in 2026. Oracle also gets a “Buy” rating, with the bank expecting a clearer path to profit growth for the database giant.
ServiceNow is the third favorite, with Goldman seeing it as a key player in the “agent orchestration layer”—the part of the AI stack that manages and coordinates different AI agents.
On the other hand, Goldman is warning investors to avoid Adobe and Datadog. They believe Adobe’s growth is “accruing away from the high end,” meaning competitors are eroding its market share. As for Datadog, the bank is concerned about “increased competition and heightened customer focus on budget optimization.”
Overall, Goldman Sachs is telling its clients to be selective. While the AI boom will create many opportunities, not all software companies will be winners. The key will be to find the ones that can turn the hype into actual, sustainable profits.
