Software Sector Sees Strong Fundamentals Amid AI Gains
The software sector showed strong fundamentals in Q2 of 2026, according to Goldman Sachs analysis. The firm tracked 40 companies and found that 20 accelerated year-over-year ARR growth compared with 19 in Q1.
Revenue performance exceeded expectations, with the median company beating second-quarter estimates by 2.4%, up from 2.1% in Q1. Earnings per share beats improved to 14.2% from 11.1% in the prior quarter.
Cross-software categories saw revenue estimate increases, led by Infrastructure and Platform software at 3.0%. Palantir led upward revisions with a 6.1% increase, driven by 150% year-over-year growth in its U.S. Commercial business and 90% growth in U.S. Government.
Other companies like Snowflake saw a 3.4% revision as its CoCo product reached 60% customer penetration, up from 50% in the prior quarter. CrowdStrike posted record net new ARR of $333 million in its second fiscal quarter of 2027, up 51% year over year.