2 Software Stocks That Whale Rock Is Betting Will Survive the Apocalypse

The software sector has faced plenty of uncertainty in 2026, from shifting enterprise spending priorities to concerns over artificial intelligence (AI)-driven disruption. Yet some institutional investors are using the volatility to build positions in companies they believe can remain long-term winners. Whale Rock Capital Management is one such investor, and its latest quarterly portfolio disclosure offers an interesting glimpse into where the hedge fund sees opportunity.

According to its Q2 2026 13F filing, Whale Rock initiated fresh stakes in Snowflake (SNOW) and Twilio (TWLO), signaling renewed conviction in two software companies with exposure to powerful trends in cloud data and customer engagement.

The firm reported a new position of 884,691 Snowflake shares, valued at approximately $225.2 million, while its new Twilio position totaled 821,768 shares, worth about $169.6 million. The two investments represented approximately 1.81% and 1.36% of Whale Rock’s reported portfolio, respectively.

For investors searching for software stocks capable of navigating an increasingly disruptive environment, SNOW and TWLO could therefore be worth a closer look.

Stock #1: Snowflake

Based in Menlo Park, California, Snowflake is a cloud-based data platform company that provides organizations with infrastructure for storing, processing, analyzing, and sharing data, while increasingly expanding into AI through its AI Data Cloud and Cortex offerings. Snowflake currently has a market cap of $112.7 billion.

SNOW has gained 64.4% over the past 52 weeks and 46% year-to-date (YTD), outpacing the S&P 500 Index’s ($SPX) 20.1% returns over the past year and 12.2% gains this year.

In terms of valuation, the stock trades at 24.07 times sales, which is higher than the sector median but lower than its own five-year average.

Snowflake released its first-quarter fiscal 2027 results on May 27, for the quarter ended Apr. 30. The company delivered strong top-line growth, with revenue rising 33% year-over-year (YOY) to $1.4 billion. Product revenue, Snowflake’s key growth metric, increased 34% YOY to $1.3 billion.

The bottom line also improved significantly, although Snowflake remained GAAP-unprofitable. GAAP net loss narrowed to $295.6 million, or $0.86 per share, from a net loss of $430.1 million, or $1.29 per share, in Q1 FY2026. On an adjusted basis, Snowflake reported non-GAAP EPS of $0.39, up from $0.24 a year earlier.

Its remaining performance obligations (RPO) climbed 38% YOY to $9.21 billion, while its net revenue retention rate improved to 126%. The company ended the quarter with 779 customers generating more than $1 million in trailing-12-month product revenue, up 29% YOY, and added 616 net new customers during the quarter, up 38% YOY.

Following the strong quarter, management raised its fiscal 2027 product-revenue outlook to $5.8 billion, implying 31% YOY growth, from its previous forecast of $5.7 billion and 27% growth. It also raised its full-year non-GAAP operating-margin target to 13.5% from 12.5%.

Analysts tracking SNOW project the company to report a loss per share of $1.81 for the full year, improving 45.8% from the prior year. Snowflake’s second-quarter fiscal 2027 earnings report is scheduled for Sept. 2, with analysts expecting loss per share to improve 36.3% YOY to $0.51.

Wall Street’s outlook on the stock is optimistic, with a consensus “Strong Buy” rating overall. Of 45 analysts covering the stock, 36 recommend a “Strong Buy,” three opt for a “Moderate Buy,” five suggest a “Hold,” and one offers a “Strong Sell.”

The stock is currently trading above the average analyst price target of $312.43, while the Street-high price target of $500 suggests that SNOW could rally as much as 56.1% from here.

Stock #2: Twilio

Based in San Francisco, California, Twilio is a cloud communications and customer engagement software company that provides businesses with APIs and tools for messaging, voice, email, authentication, and other digital communications. Its platform enables companies to build personalized, real-time customer interactions across multiple channels. Twilio has increasingly expanded beyond communications infrastructure into a broader customer engagement platform, supported by data and AI capabilities. The company currently has a market cap of $34.1 billion.

TWLO shares are up 114.9% over the past 52 weeks and 54% YTD, outperforming the S&P 500 Index in both time frames.

Priced at 75.29 times forward price-to-earnings and 7.03 times sales, the stock trades at a premium to the sector median.

Twilio reported its second-quarter 2026 results on Aug. 6, for the quarter ended June 30. Revenue increased 22% YOY to $1.5 billion, while organic revenue growth accelerated to 17%, highlighting stronger underlying demand. Non-GAAP income from operations came in at $284.6 million, up 29% YOY.

The bottom line also showed a sharp improvement, with non-GAAP EPS increasing 23.5% YOY to $1.47 from $1.19, ahead of expectations.

Customer engagement metrics also strengthened. Twilio’s Dollar-Based Net Expansion Rate increased to 116% from 108% in the year-ago quarter, indicating that existing customers increased their spending on the platform.

For the third quarter of 2026, management expects revenue of $1.505 billion to $1.515 billion, implying reported YOY growth of 16% to 16.5% and organic growth of 11% to 12%. Non-GAAP operating income is expected at $285 million to $295 million, while non-GAAP EPS is projected at $1.42 to $1.47.

More importantly, Twilio raised its full-year 2026 outlook. Reported revenue growth is now expected at 18% to 18.5%, up from the previous 14% to 15% range, while organic revenue growth is projected at 13% to 13.5%, versus 9.5% to 10.5% previously.

The consensus EPS estimate for the full year is $3.08, down 32.9% YOY, but rise 27.3% to $3.92 in the next year.

The stock has a consensus “Strong Buy” rating overall. Of 28 analysts covering the stock, 22 recommend a “Strong Buy,” two advise a “Moderate Buy,” three suggest a “Hold,” and one offers a “Strong Sell” rating.

The average analyst price target of $255 indicates potential upside of 16.3% from the current price levels. The Street-high price target of $330 suggests that the stock could rally as much as 50.5% from here.