Analyst Downgrades 9 Software Stocks. 'AI Changes Everything.'

Analysts with William Blair on Monday downgraded their ratings for nine data infrastructure and software stocks — including Dropbox (DBX), Nutanix (NTNX), Box (BOX) and Gitlab (GTLB). The analysts also reiterated bullish calls for a list of  companies they believe can benefit as AI stocks, led by Microsoft (MSFT).

“Against a backdrop where AI changes everything, shouldn’t we change the lens through which we evaluate the companies under our coverage?” a team of William Blair analysts led by Jason Ader wrote in a note to clients.

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The William Blair team analyzed each of the 17 stocks they cover based on four criteria to establish AI winners. The list included “ability to execute,” “AI defensibility” and likelihood of revenue acceleration.

The other category is whether they price their software based on total employees for clients (seat-based), or by total consumption of their product. Ader said consumption-based software models were likely to prove more resilient to AI disruption than seat-based pricing.

Nutanix was downgraded from an outperform, or buy, rating to a neutral market perform. AvePoint (AVPT), Commvault Systems (CVLT), Varonis Systems (VRNS) and Box were similarly downgraded. Backblaze (BLZE), N-able (NABL) and Gitlab were double-downgraded from outperform ratings to underperform.

Gitlab’s “competitive moat feels increasingly uncertain given the pace of innovation from new AI-centric developer tools like Claude Code, Cursor and Codex that are not stopping at the code generation layer,” Ader wrote.

Dropbox, meanwhile, was dropped from a previous neutral market perform call to an underperform. Ader wrote that the company is pinning its “growth prospects on the adoption of its new AI-centric Dash capabilities, which remain early and unproven as material revenue drivers.”

AI Stocks: Which Software Firms Could Hold Strong?

Meanwhile, the William Blair analysts reiterated an outperform view for seven stocks in their coverage. The biggest name in the group of likely AI stocks is Microsoft (MSFT).

“We see Microsoft as one of the most notable AI beneficiaries in the software sector based on robust token consumption in Azure and rising adoption of its various Copilots (particularly M365 Copilot),” Ader wrote.

Database software firm MongoDB (MDB) and data analytics company Snowflake (SNOW) were also kept at outperform ratings.

“MongoDB is likely to be an AI beneficiary as AI fundamentally reduces the cost of application development, which should result in more apps being created and more databases needed to support those apps,” Ader wrote.

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Meanwhile, Snowflake’s “consumption-based pricing model aligns well with customer usage,” Ader wrote, “allowing the company to directly capture AI-driven workload expansion without reliance on seat growth.”

William Blair also stuck to outperform ratings for enterprise data storage company Everpure (PSTG), cloud software company DigitalOcean (DOCN), data security company Rubrik (RBRK) and software development company JFrog (FROG).

And William Blair held to a market perform call for enterprise data storage firm NetApp (NTAP).

Software Stock Struggles

On the stock market today, Box stock is trading with the heaviest volume relative to its 50-day average, according to MarketSurge. Shares are down by 1% in recent trades at 24.28.

DigitalOcean stock is ahead 5.5% at 87.20 in slightly heavier than usual volume.

It has been a tough year for software stocks overall. Of the 17 stocks listed in William’s Blair’s report, all but one were down year-to-date as of Friday’s close. Out of those stocks, 12 are down more by more than 20% year to date. The S&P 500 closed Friday 5% lower, compared to the start of the year.

Gitlab has been the worst performer, with a 40% year-to-date slide. Everpure, meanwhile, entered Monday trading down a more manageable 6% year to date. Microsoft was down 21% year to date.

DigitalOcean is the only stock in positive territory for 2026. Shares have rallied 72% year to date. Ader said that new leadership at the cloud infrastructure company has helped accelerate revenue growth.

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