Wells Fargo previews U.S. software sector first-quarter earnings report

LootboxPhobia · 2026-04-02T13:17:38+00:00

Wells Fargo releases a preview of the Q1 earnings report for the U.S. software sector, emphasizing investor selectivity and focus on artificial intelligence, expecting performance to be similar to Q4. They are optimistic about Datadog and HubSpot, noting that AI beneficiary stocks may regain confidence, and investor reactions to related earnings reports will be influenced by guidance and data.

LootboxPhobia

2026-04-02 13:17:38

Abstract generation in progress

Investing.com – Wells Fargo released a Q1 earnings preview for the U.S. software sector, emphasizing investors’ selectivity and attention to AI defensiveness.

The company said it expects Q1 to reflect market sentiment similar to Q4, with investors showing increasingly strong selective behavior. Wells Fargo said it is bullish on Datadog (Nasdaq stock ticker: DDOG) and HubSpot (NYSE stock ticker: HUBS) for their performance in Q1.

The preview notes that software-as-a-service companies face tighter scrutiny in Q1. Wells Fargo said that conversations with investors suggest uncertainty is increasing; many noted that, given ongoing increases in AI spending, they are more focused on the long-term durability of software stocks.

The company said current market positioning leans toward going long AI beneficiaries in Q1, because these stocks are more likely to alleviate concerns about AI substitution and help restore confidence in growth trajectories. Wells Fargo expects that guide credibility and AI data points will become the main drivers of how investors react in the upcoming earnings reports.

For Datadog, Wells Fargo said investors are taking a more positive view of the upside potential brought by the company’s new AI Labs, and it noted that roughly 3% of above-consensus performance is a reasonable level to maintain the current growth trajectory. The company said it has observed that Datadog’s API is being used for Claude Code, but it added that it is difficult to know the scale of usage.

For HubSpot, Wells Fargo said that roughly 2.5 percentage points of above-consensus performance should support the calculated re-acceleration in customers, and the full-year guidance raise may not be as significant as in the recent few quarters.

Wells Fargo said its survey of Anthropic customers indicates that, in some cases, there is nearly no cap on enterprise spending on AI. The survey also suggests enterprises are encouraged by the potential ROI from AI investments. The company said the survey shows that the rapid growth in AI investment has not crowded out other spending categories.

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