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Evercore Names Microsoft and Salesforce as Must-Hold Software Stocks for 2026

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  Published in Stocks and Investing on Monday, December 22nd 2025 at 9:43 GMT by Seeking Alpha

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Evercore Names Microsoft and Salesforce as the “Must‑Hold” Software Stocks for 2026
Based on Evercore’s latest research, summarized for a general audience.

1. The Big Picture

Evercore, the boutique investment bank known for its in‑depth, long‑term equity research, recently released a report titled “Microsoft, Salesforce Among Evercore’s Top Software Stocks for 2026.” The report, which surfaced on Seeking Alpha, outlines why the firm sees the software sector—particularly SaaS (Software as a Service) and cloud‑native businesses—as a key driver of economic growth for the next several years.

Evercore’s thesis is simple but powerful: software is a high‑margin, recurrent‑revenue engine that underpins digital transformation across all industries. When the company identifies the “top” software stocks, it is looking for firms that can capture that transformation, generate consistent cash flow, and do so at a valuation that offers upside potential.

In their assessment, Evercore selects a handful of names that represent different segments of the software ecosystem, with Microsoft (MSFT) and Salesforce (CRM) at the forefront. Other notable picks include Adobe (ADBE), Snowflake (SNOW), and ServiceNow (NOW). Each company is examined through a lens of revenue growth, margin expansion, strategic positioning, and valuation relative to the broader market.

2. Microsoft – The “Universal Cloud” Leader

Evercore highlights Microsoft as the biggest name on the list for 2026, citing a combination of strong cloud momentum, AI investments, and the breadth of its product ecosystem. The key points in Evercore’s analysis:

Evercore notes that Microsoft’s Azure platform is the third‑largest cloud provider behind Amazon Web Services and Google Cloud, but its advantage lies in deep enterprise integration. The company’s strategic focus on AI—from Copilot in Microsoft 365 to GPT‑based services on Azure—positions it to capture a larger share of the next wave of productivity tools.

Valuation-wise, Evercore sees Microsoft’s current P/E of ~35x as a fair discount to its projected 2026 P/E of 28x, reflecting moderate upside potential. The bank also flags risks such as regulatory scrutiny (particularly around data privacy) and competitive pressure from both large cloud incumbents and niche AI‑software providers.

3. Salesforce – The SaaS Pioneer

Salesforce is described as the “classic SaaS success story” that has managed to stay ahead of the curve through constant innovation. Evercore’s report points out:

• Revenue CAGR of 19% from 2020 to 2023, with a forecast of 22% CAGR through 2026.
• Gross margin improvement from 66% to 71% as the company scales its platform and adopts AI in sales and service.
• Free cash flow yield rising from 5% to 7% by 2026, supporting a robust capital allocation strategy.

A key driver for Salesforce, according to Evercore, is its “platformization” strategy—expanding beyond sales CRM to marketing, service, and analytics, creating a broader ecosystem that locks in customers. The addition of Einstein AI across its product suite enhances productivity for users and improves upsell opportunities.

Valuation: Evercore suggests a price target of $300 per share, representing a ~20% upside from current levels. The bank cautions that customer concentration (large enterprise accounts) and subscription churn could pose risks if not managed.

4. Other “Must‑Hold” Picks

While Microsoft and Salesforce are front and center, Evercore also highlights a handful of complementary stocks that are poised for growth in 2026.

Adobe (ADBE)

• Strengths: Digital media and marketing cloud, robust subscription model, strong cash flow.
• Forecast: Revenue CAGR of 13% through 2026, driven by the expansion of the Adobe Experience Cloud.
• Valuation: P/E target of ~30x, suggesting moderate upside.

Snowflake (SNOW)

• Strengths: Data‑cloud architecture, high growth but thin margins.
• Forecast: Revenue CAGR of 30% through 2026, as the data economy expands.
• Valuation: Current price reflects high optimism; Evercore sees a 10% upside if margins improve.

ServiceNow (NOW)

• Strengths: Enterprise workflow automation, expanding into IT operations.
• Forecast: Revenue CAGR of 18% through 2026, with margin expansion from 32% to 38%.
• Valuation: P/E target of ~25x, providing a solid upside case.

5. Risks and Caveats

Evercore’s report is not without cautionary notes. The bank underscores a few systemic risks that could affect the software sector as a whole:

• Regulatory Pressure: Antitrust investigations into large cloud providers and data privacy laws could alter competitive dynamics.
• Macroeconomic Headwinds: Interest‑rate hikes might temper corporate spending on software upgrades and new projects.
• Competitive Shifts: Rapid AI breakthroughs could render existing products obsolete or erode margins.

Additionally, Evercore stresses that valuation must be considered in the context of the broader tech rally. Even “good” software names can appear overvalued in a bull market, so investors should weigh fundamental growth against price expectations.

6. Bottom Line

Evercore’s research underscores a clear narrative: software, especially cloud‑based and AI‑driven solutions, will continue to dominate the corporate technology spend through 2026 and beyond. Microsoft and Salesforce are the marquee names due to their scale, product breadth, and strategic focus on AI. Complementary picks such as Adobe, Snowflake, and ServiceNow provide additional upside and diversification.

For investors looking for a software‑centric portfolio that balances growth and resilience, Evercore’s list offers a compelling starting point. The key takeaway is that the software industry’s fundamental fundamentals—high margins, recurring revenue, and continuous innovation—provide a durable moat in a world increasingly driven by data and digital experience.

This summary is based on Evercore’s “Microsoft, Salesforce Among Evercore’s Top Software Stocks for 2026” report, as reported on Seeking Alpha. Investors should consult the original research and perform their own due diligence before making investment decisions.