Software stocks have experienced a significant pullback of 24% year-to-date as investors reassess valuations amid concerns about artificial intelligence disruption. Despite the broader sector weakness, select companies within the space are demonstrating fundamental strength that may not be fully reflected in current share prices.
Design collaboration platform Figma has seen its valuation decline 74% from peak levels, yet the company continues to exhibit robust operational performance. The firm reported a 40% year-over-year revenue increase and achieved GAAP profitability while simultaneously expanding its artificial intelligence capabilities. Meanwhile, Axon Enterprise, a specialized provider of technology solutions for law enforcement agencies, has posted 39% revenue growth and is investing substantially in AI-powered features, including its Draft One tool designed to streamline police report generation.
Axon has provided forward guidance projecting $8 billion in revenue by 2028, signaling management's confidence in sustained market demand for its specialized software offerings. Both companies exemplify a segment of the software industry that has maintained earnings expansion and strategic product development despite macroeconomic headwinds affecting technology valuations more broadly.