RBC Capital says these software companies are the most likely to be acquired as AI eats the world

Core Insights - The threat of AI has significantly impacted the software sector, leading to a decline in share prices and creating opportunities for opportunistic buyers [1][2] - Software M&A activity has surged by 78% this year, with private equity deal volume more than doubling as investors seek bargains [2] - Analysts suggest that the current underperformance of software stocks may lead to increased acquisition activity, particularly from private equity firms [2][4] Software M&A Activity - The software sector is experiencing a wave of mergers and acquisitions, driven by depressed valuations and the search for value [2][4] - Potential acquisition targets include companies with solid customer bases and cash flow but limited AI narratives, making them attractive to private equity buyers [3][4] Potential Acquisition Targets - Asana (ASAN): Under pressure from AI competition, remains a potential target despite founder-controlled voting structure [4] - Box (BOX): Stagnant growth and undervalued shares could attract private equity buyers [4] - Confluent (CFLT): Positioned well in data streaming, appealing to strategic buyers [4] - Coursera (COUR): Large learner base and AI partnerships make it attractive for strategic buyers [4] - Dropbox (DBX): Could become a target if new products underperform [4] - DocuSign (DOCU): May attract private equity interest if its pivot fails [4] - Elastic (ESTC): Strong position in GenAI and search makes it a target for consolidation [4] - Five9 (FIVN): Strong technology and margin improvement potential could appeal to enterprise companies [4] - Fastly (FSLY): Solid edge-computing technology makes it attractive to acquirers [4] - Gen Digital (GEN): Stable margins and strong cash flow position it as a buyout candidate [4] - GitLab (GTLB): Growing presence in developer tools makes it appealing for strategic acquisition [4] - ZoomInfo (GTM): Valuable CRM data positions it well for acquisition [4] - N-Able (NABL): Attractive consolidation play for private equity in the managed service provider market [4] - NICE (NICE): Misunderstood and undervalued, could unlock value through a takeover [6] - Nutanix (NTNX): Growth in hybrid-cloud adoption makes it a strategic target [6] - PagerDuty (PD): Fits as a logical acquisition for IT operations integration [6] - Qualys (QLYS): High margins make it attractive within cloud security [6] - Rapid7 (RPD): Improved cash profile post-restructuring could appeal to private equity [6] - Teradata (TDC): Progress in cloud analytics positions it as a potential target [6] - Varonis (VRNS): Focus on data security makes it suitable for GenAI-driven acquisition [6] - Zoom (ZM): Best-in-class video platform could entice acquirers seeking AI synergies [6]