With traders rotating out of high-flying AI hardware and into areas like software and cloud services, the current market backdrop is putting a fresh spotlight on select Software and Cloud Services Stocks screener picks. Slower labor data, a sharp pullback in chip and high-performance computing stocks, and attention on upcoming earnings and new Fed task forces are all contributing to this shift. This article walks through 3 stocks exposed to these headlines and explains how these cross-currents could matter for your watchlist, whether you are looking for potential opportunities or thinking about what to avoid.

Calix (CALX)

Overview: Calix is a cloud and software company that helps broadband service providers deliver and manage Wi-Fi, security, and connected experiences for homes, businesses, and entire communities through its Calix Cloud platform, SmartLife managed services, and GigaSpire/GigaPro Wi-Fi systems. Its tools are designed to give providers clearer insight into subscribers, support new services, and simplify network operations across multiple regions.

Operations: Calix generates about US$1.06b in revenue primarily from developing, marketing, and selling communications access systems and software, with most revenue coming from the United States and smaller contributions from Europe, the rest of the Americas, and other international markets.

Market Cap: US$2.45b

Calix stands out as traders look beyond crowded AI hardware trades because its business is directly tied to the software and cloud tools broadband providers use to run and monetize their networks. The company focuses on AI native platforms such as Calix One and SmartMDU that are intended to help customers grow revenue, lift ARPU, and cut operating costs. Recent news highlights subscriber engagement, expanding partnerships, and product wins in areas such as multifamily housing and rural broadband. At the same time, investors may want to monitor customer concentration, reliance on external funding, and the pace at which providers adopt new AI driven services. Overall, Calix combines high growth expectations, active product rollout, and execution considerations that may warrant closer evaluation.

Calix is pitching AI native platforms as a way for broadband providers to grow revenue, but many investors may be missing how that story compares with the underlying numbers in the analysis report for Calix

Technology One (ASX:TNE)

Overview: Technology One is an Australia based enterprise software company that provides cloud based ERP and related applications for functions like finance, HR, asset management, student management, and local government services to public sector and corporate customers.

Operations: Technology One generates most of its A$631.2m in revenue from Software at A$435.5m, with smaller contributions from Corporate at A$97.8m and Consulting at A$98.0m.

Market Cap: A$10.0b

Technology One gives you exposure to the same software rotation that is drawing money out of AI hardware, backed by cloud ERP products that serve mission critical roles in local government, education and other regulated sectors where switching can be slow. Recurring revenue from SaaS, solid profitability metrics like a 33% ROE, and cash flow that management describes as predictable help support dividends, which recently included an A$0.08 interim payout. On the flip side, a high P/E, reliance on external funding, insider selling, and high expectations for ARR and margin expansion mean the bar is set high. The key question is whether that premium is justified by the underlying numbers and contract stickiness that many investors may be glossing over.

Technology One’s rich P/E and steady SaaS cash flows have many assuming the full story is already priced in, yet the real tension between contract stickiness and growth expectations only shows up inside the analyst forecasts for Technology One

Shopify (SHOP)

Overview: Shopify is a commerce platform that lets businesses of all sizes run online and offline sales from one place, handling storefronts, payments, inventory, shipping, marketing, analytics, and financing across web, mobile, physical stores, social media, and marketplaces.

Operations: Shopify generates about US$12.37b in revenue from internet software and services, with most coming from the United States and additional contributions from APAC and Canada.

Market Cap: US$155.42b

Shopify is drawing fresh interest as investors rotate into software and cloud plays because it is increasingly acting as a full commerce operating system, tying merchants into payments, AI powered tools and data services that can support efficiency and retention. Forecast earnings and revenue growth in the high teens to high 20s, high quality earnings and expanding AI driven products such as Sidekick and Agentic Commerce appeal to investors who want exposure to ecommerce and AI without owning hardware stocks. At the same time, a very high P/E, margin pressure, reliance on external funding and recent insider selling mean expectations are demanding and execution needs to stay tight. This is exactly where the deeper story on Shopify starts to get more interesting.

Shopify’s high P/E and expanding AI tools suggest something is decoupling between the story and the expectations baked into the stock. The real tension shows up once you study the analyst forecasts for Shopify

The three software and cloud stocks covered here are only a starting point, with the full Software and Cloud Services Stocks screener surfacing 45 more companies that pair cloud based solutions with financial profiles and stories that may be just as compelling as the ones you have just read. If you want to identify the specific catalysts, balance sheet strength, and AI or software narratives that match your own playbook, use the Software and Cloud Services Stocks screener to analyze and filter for the highest conviction ideas.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.