Snowflake, Datadog, and MongoDB: Why BofA Is Bullish on These Software Stocks

TLDR

• Bank of America has named Snowflake, Datadog, JFrog, MongoDB, and Twilio as its top software picks for H2 2026
• The five stocks are up 30% on average in 2026, while the broader software ETF is down 12%
• All five beat earnings expectations, with an average post-earnings gain of 36%
• AI demand is a core growth driver across all five companies
• BofA says conservative management guidance sets the stocks up for further earnings beats

Bank of America analyst Koji Ikeda has identified five software infrastructure stocks he believes will continue to gain ground in the second half of 2026. The group, dubbed the “Fab Five,” has already outpaced the broader software sector by a wide margin this year.

While the iShares Expanded Tech-Software Sector ETF is down 12% in 2026, these five names are up 30% on average. Ikeda maintained Buy ratings on all five.

The bank says strong earnings results, conservative guidance, and growing AI adoption are the key reasons these stocks are well positioned heading into the back half of the year.

The Five Stocks and Why BofA Is Bullish

Snowflake

Snowflake stock surged more than 35% in a single session after its latest earnings report. Product revenue grew 34% year-over-year, up from 30% the prior quarter.

Snowflake Inc., SNOW

BofA says the company’s AI product suite, including Cortex AI and Cortex Code, is becoming deeply embedded in enterprise workflows. Faster-than-expected AI adoption could push the stock higher.

Datadog

Datadog was the standout performer, climbing nearly 70% after earnings. Revenue growth accelerated to 32% year-over-year, and AI-related business now makes up more than 10% of total revenue, growing at over 100% annually.

BofA says the observability category remains one of the most attractive in software, and Datadog is well placed to capture that demand long-term.

JFrog

JFrog advanced 43% following its earnings release. Cloud revenue growth hit 50%, up from 42% the prior quarter.

The company is positioned as a risk management play within software, covering the full supply chain from binary management to security. BofA says a large enterprise deal or a high-profile software supply chain breach could act as a catalyst.

Twilio

Twilio shares rose nearly 50% after reporting better-than-expected results. Gross-profit-dollar growth improved to 16% from 10%.

BofA sees Twilio as a key infrastructure layer for business and AI agent communications across voice and messaging channels. New deals in voice AI and margin improvements are the main upside triggers the bank is watching.

MongoDB

MongoDB posted the smallest post-earnings move of the group, rising just 4.5%. Atlas revenue growth edged up to 29.4%.

BofA believes the bigger AI tailwind for MongoDB is still ahead, tied to the rollout of consumer-facing enterprise AI applications. The bank says that catalyst could arrive sooner than the market expects.

What to Watch in H2 2026

BofA says all five management teams gave conservative outlooks despite strong results, which leaves room for upward revisions later in the year.

The bank expects investors to monitor whether AI demand continues to build and whether enterprise adoption of new AI tools can sustain the group’s growth.

For now, BofA views the Fab Five as among the best-placed software names heading into the second half.

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