Top AI Software Stocks to Watch, According to Macquarie Research

Macquarie highlighted ADSK, DDOG, and ZS as top AI software/cybersecurity picks, citing strong product positioning, AI-driven demand, and healthy execution. ADSK beat fourth-quarter expectations and guided fiscal 2027 above consensus, DDOG delivered a sizable revenue beat and guided ahead of first-quarter estimates, and ZS beat second-quarter revenue by $17 million while lifting fiscal 2026 guidance by $4 million at the high end. The article is constructive for the group, though the broader impact is likely limited to individual names.

Analysis

The clean takeaway is that AI is becoming a security-budget expansion story, not just a feature upgrade cycle. That favors the vendors sitting at the control points of telemetry, exposure management, and policy enforcement: DDOG and ZS likely capture more wallet share because AI attacks increase both the volume of data to monitor and the need for automated response, while smaller point solutions face distribution pressure as buyers prefer integrated platforms. ADSK is different: its AI angle is more about workflow monetization and ecosystem lock-in, so it benefits only if the market believes AI can lift attach rates faster than the fading transaction-model tailwind rolls off.

The second-order risk is timing mismatch. Management commentary and analyst enthusiasm can keep these names bid for the next 1-2 earnings cycles, but the macro signal embedded in weaker software hiring suggests customers are still optimizing spend, which usually delays broad-based seat expansion by 1-2 quarters. That means the market may overpay for near-term AI narrative while underestimating the possibility that cybersecurity demand stays durable but procurement cycles lengthen, which would favor vendors with usage-based monetization and strong FCF over pure top-line growers.

Consensus is likely underestimating the platform consolidation trade inside cybersecurity. If AI attacks force faster response times, buyers may rationalize fewer vendors and higher spend per vendor, which is structurally bullish for ZS and, to a lesser extent, DDOG via observability/incident response adjacencies; point-solution competitors are the hidden losers even if they are not named here. For ADSK, the contrarian view is that AI may improve productivity faster than it expands ACV, meaning the stock can work on margin and retention, but the upside likely caps unless greenfield construction and marketplace adoption accelerate into the next fiscal year.

Key Decisions for Investors

• Long DDOG into the June product cycle; use a 6-9 month horizon. Risk/reward is attractive if AI observability drives incremental platform adoption, with downside limited by recurring revenue quality and upside tied to another quarter of estimate revisions.
• Long ZS on any post-earnings or post-conference weakness over the next 4-8 weeks. The base case is that AI-driven threat complexity expands platform budgets; risk is competitive pricing pressure, so size for volatility.
• Pair trade: long ZS / short a basket of mid-cap cybersecurity point solutions for 3-6 months. This captures consolidation as buyers favor integrated platforms with AI defense capabilities; stop if competitive checks show displacement improving for niche vendors.
• Tactically long ADSK only on confirmation of marketplace and AI monetization at the next print or user commentary, with a 6-12 month horizon. If transaction-model tailwinds fade faster than expected, fade rallies rather than chase.
• For event-driven traders, buy short-dated upside in DDOG or ZS into catalyst windows only if implied volatility is not already pricing a beat; otherwise prefer common stock, since the thesis is multi-quarter compounding rather than a single print.