Software stocks have delivered uneven returns in recent years as higher interest rates, execution challenges and shifting enterprise priorities weighed on performance. As spending stabilizes, investors are reassessing the sector, particularly areas tied to cybersecurity, cloud adoption and developer productivity.
BNN Bloomberg spoke with Fatima Boolani, managing director and co-head of software equity research at Citi, about where she sees opportunity in software and how AI-driven infrastructure upgrades are reshaping enterprise technology budgets.
Key Takeaways
- Software stocks have seen uneven performance due to execution issues and margin pressure, but fundamentals are showing signs of stabilization.
- Cybersecurity budgets are accelerating as enterprises prioritize protection amid rising AI adoption and expanding attack surfaces.
- AI-driven infrastructure upgrades are prompting organizations to modernize IT stacks, creating durable demand for core software tools.
- Data growth and ransomware threats are elevating the importance of backup, recovery and cyber-resilience solutions.
- Developer productivity and collaboration software remain well positioned as AI increases coding efficiency and application complexity.
Read the full transcript below:
ANDREW: Hot Picks today, and we are looking at software. Our guest has Palo Alto, the cybersecurity player, as her top idea. She says that over the past few years its stock performance has been uneven, but business has picked up, and she is giving Palo Alto the benefit of the doubt given its history of navigating short-term headwinds. We’re joined by Fatima Boolani, managing director and co-head of software equity research at Citi. Thank you very much for joining us.
FATIMA: Thank you for having me, Andrew.
ANDREW: I think at one time people thought, well, Palo Alto — how could you mess with that stock? Virus threats, such a dangerous world out there in cybersecurity terms. But there has been some choppiness along the way.
FATIMA: Absolutely. This is a name that we are recommending investors put in their portfolios for 2026. The stock has had some lagging performance, but we believe this is the year it can really be off to the races. There are three elements grounding our view.
First, cybersecurity budgets are increasing. I joke that when cybersecurity budgets start decreasing, then we have a real problem. Budgets accelerating is an extremely positive dynamic. Based on our proprietary work, a lot of that upward pressure is being driven by AI and generative AI, with organizations actively planning large-scale AI projects and asking how to wrap cybersecurity around new frameworks, protocols and applications they plan to deploy.
As AI adoption rises, the use of novel technology increases, which expands the attack surface and the ways malicious actors can access an organization. Palo Alto has what is effectively a comprehensive portfolio to guide organizations through this transition and monetize broad parts of that spend in the process.
ANDREW: We’re tight for time. Tell us about your next name, Rubrik. Just remind us what they do.
FATIMA: Rubrik provides backup and recovery solutions alongside cyber-resilience capabilities. That matters when organizations experience natural disasters, operational errors, or increasingly, ransomware attacks where bad actors hold data hostage.
As data continues to grow — and as AI adoption creates new vulnerabilities — cyber resilience becomes critical. We are at the cusp of a generational shift in how organizations think about their IT stacks and infrastructure as they prepare for AI. That requires modernization, and both Palo Alto and Rubrik provide the underlying infrastructure software that helps make this transition secure.
ANDREW: And finally, TEAM. Remind us who they are and why you like them.
FATIMA: Atlassian offers a platform that enables more meaningful collaboration across workforces, particularly for developers, IT teams and business users. We see a significant disconnect between valuation and fundamentals.
There is concern that AI coding tools could pressure monetization, since Atlassian prices based on seats or headcount. We do not believe that will materialize. If more people are coding more efficiently, productivity gains in software development increase, which feeds directly into Atlassian’s strengths in managing, debugging and collaborating around code in this new AI-driven era.
ANDREW: Thank you very much. I really appreciate it.
FATIMA: Glad to be here.
ANDREW: Fatima Boolani, managing director and co-head of software equity research at Citi.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| PANW NASDAQ | N | N | Y |
| RBRK NYSE | N | N | Y |
| TEAM NASDAQ | N | N | N |
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This BNN Bloomberg summary and transcript of the Jan. 19, 2026 interview with Fatima Boolani are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
