Bernstein’s 2026 projection for the software sector consists of a typical scenario, where the investors, who were worried about the macroeconomic problems at the beginning of 2025, are now talking about AI instead. The analyst Mark L. Moerdler claims that the discussion has changed quite drastically, with AI not being a minor issue anymore but the central one.
The two queries, which are most debated among the investors are if the sector is facing an AI bubble, and if AI will ultimately consume the entire enterprise software market. Therefore, Bernstein, somewhere between impulsiveness and fear, sees a balanced opportunity emerging.
Rare Chance for Quality at a Discount
However, the noise does not affect Bernstein, as he thinks that the year 2026 is going to present the opportunity to buy very high quality software stocks at very deep discounts, which the company believes to be a rare chance. Also, as the process of AI uncertainty settles and the valuation cools down, the investor discussions start becoming slowly but gradually “sane,” and are moving from wide narratives to company-specific fundamentals.
The firm believes that this type of market conditions prefers a stock-picking approach over a thematic one, specifically as markets differentiate between companies that are actually getting AI benefit and those who are just putting the AI tag in their earnings calls for attention.
Microsoft Takes the Lead in Bernstein’s 2026 Picks
Microsoft comes first in Bernstein’s recommendations, and the company speaks with certainty about its software picks for 2026. The investment company also mentions Oracle, SAP, and HubSpot as the firms to invest in immediately, but suggests MongoDB as a company that is worth accumulating during market corrections.
Bernstein is more reserved in its assessment of Workday and Adobe, and advises further study to discover the proper timing for investing. Also, it is still doubtful about Snowflake. However, Salesforce mostly receives the toughest evaluation, where Bernstein declares doubt in terms of its ability to perform competitively, as the troubles of competition and execution persists.
Microsoft’s Busy Cycle Adds Context
A series of recent actions, apart from the position of Microsoft in Bernstein’s forecast, adds to the context of the news. TD Cowen slashed its price target to $625 from $655, listing capacity limitations as the reason, but still maintaining a buy rating before the company’s earnings report. Goldman Sachs was even more optimistic, as it reasserted its buy rating with a $655 target and pointed out Microsoft’s Community-First AI Infrastructure Plan, which seeks to balance data center electricity costs by paying higher local utility rates.
However, not everything has been free of issues or entirely smooth, as the regulator has launched probes into Microsoft’s gaming sales practices and licensing fees in Italy and Switzerland, which have cast a shadow over the company’s operations. This reminds the investors that even the AI giants are not free from scrutiny.
Microsoft’s Elevate for Educators Program
Further adding up to its AI strategy, Microsoft took a step ahead by launching the Elevate for Educators program, which provides AI tools and credentials to the customers of Microsoft 365 Education for no added charge. The move signifies a large commitment of the company to use AI for the good of all sectors including education, instead of just restricting itself in enterprise and cloud products.
These actions lead to a situation, where a company is at the crossroads of aggressive AI investments and regulatory challenges, while at the same time is trying not to disappoint Wall Street with its community focused initiatives.
Bottom Line
In Bernstein’s 2026 software forecast, it is indicated that although AI continues to generate equal amounts of nervousness and excitement, the investors who can manage to base their decisions on fundamentals might get rewarded. In an AI world that is at the beginning of its development, Microsoft is the stock that perfectly blends size, strategy, and durability.
As the industry goes through hype, regulation, and real opportunity, Bernstein’s message is quite obvious, where the next phase of software investing might be in favor of proper leaders than flashy promises, and for the time being, Microsoft seems to be the one that is most ready to take the lead in this aspect.