The software sector is experiencing significant volatility as the impact of AI continues to unfold, affecting stock performance. Freshworks (FRSH) and Toast (TOST) have emerged as strong contenders for a rebound, earning a Zacks Rank #1 (Strong Buy) due to positive earnings revisions and improving profitability. Both companies are poised for growth amid rising demand for their software solutions.
Freshworks, known for its cloud-based customer engagement tools, has seen its FY26 and FY27 earnings per share (EPS) estimates rise over 10% and 14%, respectively. Although its annual earnings are expected to dip by 6% this year, a rebound of 25% to $0.78 per share is projected for FY27. Meanwhile, Toast, catering to approximately 171,000 restaurant locations, anticipates a 50% surge in EPS this year, climbing further to $1.74 next year, supported by nearly 20% sales growth anticipated in FY26.
With Freshworks trading nearly 20% below its 52-week high and Toast’s stock down over 50% from its one-year peak, both companies represent attractively priced opportunities for investors looking for growth in the evolving software market.
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