Oppenheimer Taps Microsoft, ServiceNow as AI Software Focus Shifts to ROI

The era of pure experimentation in enterprise artificial intelligence is over, and investors should now focus on software companies that can demonstrate a clear return on investment, according to a new analysis from Oppenheimer.

The Shift to Measurable AI Returns

Oppenheimer analysts report that while enterprise AI spending remains robust, customers and investors have shifted their focus from adoption metrics to measurable business outcomes. AI is increasingly being treated as a recurring operating expense, with chief financial officers evaluating its ROI alongside traditional labor costs.

The firm believes not all software vendors are positioned to capitalize on this trend. The strongest setups are found in system-of-record vendors and companies using seat-plus-consumption pricing models. According to the analysis, these models combine defensible customer relationships with direct exposure to rising AI usage, offering the clearest path to AI-driven growth.

Oppenheimer's Top Software Picks

Based on this market shift, the investment firm identified its top picks in the software applications sector.

Microsoft (MSFT)

Oppenheimer highlighted Microsoft for its accelerating platform demand, disciplined capital allocation, and unmatched distribution across its massive installed base. The firm noted that Microsoft has already built an AI-related business with over $1 billion in revenue.

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ServiceNow (NOW)

ServiceNow was selected for its combination of best-in-class growth and cash flow generation at scale, according to Oppenheimer. The company also benefits from durable tailwinds in automation and security and has similarly established an AI business exceeding $1 billion, separating it from competitors.

Braze (BRZE)

Oppenheimer views Braze as a system-of-record for customer engagement, presenting one of the most attractive risk-reward opportunities in its coverage universe. The analysis cited the company's competitive advantages anchored in proprietary data, workflow context, and enterprise-grade security.

Market Outlook and Key Risks

Looking at the broader sector, Oppenheimer expects that as evidence of AI-driven revenue and margin durability builds, earnings expectations for software companies should move higher, supporting valuation expansion.

However, the firm also identified a primary risk for the sector. The analysts cautioned that aggressive spending on AI could potentially crowd out broader software budgets, and that margin pressure on companies could persist longer than currently expected.