Key Takeaways
- Bank of America highlights Snowflake, Datadog, JFrog, MongoDB, and Twilio as premier software infrastructure investments for the second half of 2026
- These five equities have collectively surged 30% year-to-date in 2026, contrasting sharply with the software sector’s 12% decline
- Each company exceeded earnings forecasts, delivering an impressive average post-earnings rally of 36%
- Artificial intelligence adoption serves as the primary catalyst driving expansion across all five businesses
- BofA analysts note that management’s cautious forward guidance creates potential for additional earnings surprises
Bank of America’s Koji Ikeda, a leading analyst covering the software sector, has pinpointed five infrastructure software companies that he expects will maintain their momentum through the latter half of 2026. This select group, referred to internally as the “Fab Five,” has dramatically outperformed the wider software industry throughout the current year.
The iShares Expanded Tech-Software Sector ETF has posted a 12% decline in 2026, yet these five standout names have collectively climbed 30% on average. Ikeda has reaffirmed Buy ratings across the entire portfolio.
According to the investment bank, robust quarterly results, prudent management forecasts, and accelerating AI integration position these companies favorably as the year progresses.
BofA’s Top Software Picks and Investment Rationale
Snowflake
Snowflake stock experienced a remarkable single-session surge exceeding 35% following its most recent quarterly disclosure. The company reported product revenue expansion of 34% year-over-year, representing an acceleration from the previous quarter’s 30% growth rate.
Bank of America highlights that the company’s artificial intelligence product portfolio, featuring Cortex AI and Cortex Code solutions, is gaining significant traction within enterprise technology stacks. Should AI implementation proceed ahead of current expectations, the analysts believe additional upside potential exists.
Datadog
Datadog emerged as the group’s top performer, skyrocketing nearly 70% in the wake of its earnings announcement. The company posted revenue growth acceleration to 32% year-over-year, with AI-driven business segments now representing more than 10% of total revenue while expanding at triple-digit annual rates.
BofA characterizes the observability software category as among the most compelling investment opportunities in the technology sector, with Datadog uniquely positioned to capitalize on sustained demand.
JFrog
JFrog shares jumped 43% post-earnings. The company’s cloud revenue growth reached 50%, marking a significant acceleration from the prior quarter’s 42% expansion.
The firm occupies a strategic position in software risk mitigation, offering comprehensive solutions spanning the entire development supply chain from binary artifact management through security protocols. BofA analysts suggest that either a transformative enterprise contract or a high-visibility supply chain security incident could serve as a major catalyst.
Twilio
Twilio experienced an approximate 50% valuation increase after delivering results that exceeded Wall Street expectations. The company’s gross-profit-dollar growth strengthened to 16% from the previous 10% rate.
Bank of America positions Twilio as critical infrastructure enabling communication between businesses and AI-powered agents across voice and messaging platforms. The firm is monitoring new voice AI partnerships and margin expansion as primary drivers for continued appreciation.
MongoDB
MongoDB recorded the most modest post-earnings movement within the group, advancing 4.5%. The company’s Atlas revenue growth ticked upward to 29.4%.
BofA maintains that MongoDB’s most significant AI-related growth opportunity remains on the horizon, linked to widespread deployment of consumer-facing enterprise AI applications. The bank’s analysts suggest this inflection point may materialize earlier than current market consensus anticipates.
Key Factors for the Second Half of 2026
Bank of America notes that all five management teams provided measured forward guidance despite delivering exceptional results, creating opportunity for positive revisions as the year unfolds.
The investment bank anticipates that investors will closely track whether artificial intelligence demand maintains its trajectory and whether enterprise adoption of emerging AI technologies can sustain the group’s elevated growth rates.
Currently, BofA positions these five companies among the most favorably situated software investments entering the second half of the year.
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