BofA Taps Box, Samsara, and Hinge Health as Top Software Stocks Ahead of Q3 Earnings

Bank of America analysts have highlighted Box (BOX), Samsara (IOT), and Hinge Health (HNGE) as top picks in the application software sector heading into the third-quarter earnings season. In a research note, the firm stressed that selectivity is now critical as artificial intelligence and shifting enterprise budgets create a widening gap between market leaders and laggards.

Navigating a Shifting Software Landscape

According to BofA, investor focus has sharpened on growth reacceleration, with a clear preference for companies demonstrating successful product cycles and a viable path to monetizing AI. While analysts noted that AI products are delivering a measurable return on investment, they cautioned that broader enterprise adoption is still being held back by challenges related to governance, data security, trust, and budget constraints.

The firm also identified a new competitive dynamic for the sector: the rise of general-purpose AI agents from large technology platforms. Despite these pressures, many application software stocks continue to trade at valuation discounts compared to the broader software industry, and BofA observed that short interest in the sector has declined from its peak earlier this year.

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BofA's Top Picks

Bank of America detailed its bullish case for three specific companies based on recent analysis and channel checks:

• Box Inc. (BOX): Named as BofA's top pick in the group, Box is viewed as an "underappreciated AI winner" that is in the early stages of a multi-year growth acceleration. The firm sees the potential for Box to report its sixth consecutive quarter of growth acceleration, forecasting 12% constant currency growth in the third quarter, while noting the stock still trades at a discount to its peers.
• Samsara Inc. (IOT): BofA's channel checks indicate that Samsara is accelerating its enterprise market share capture from smaller point solution vendors. This has increased the firm's confidence that Samsara's net new annual recurring revenue (ARR), a key performance metric, will surpass buyside expectations for the third quarter.
• Hinge Health Inc. (HNGE): The analysts see potential for upside this quarter driven by better-than-expected member expansion and average selling price performance. BofA's revenue growth estimate of 51% is notably above the Wall Street consensus of 46%. The firm's checks also suggest that continued eligibility expansion will support elevated growth for the company into 2027.