Atlassian Soars 34%, Twilio Leaps 27%, Cloudflare Advances 9% in Software Stock Surge
Three software stocks are posting some of the biggest single-day gains in the sector this year, and the catalysts driving them higher suggest the rally could be just getting started.
Software stocks are surging Friday, led by Atlassian (NASDAQ:TEAM | TEAM Price Prediction) stock, which has jumped 34% to $148.09 after a stronger-than-expected quarterly report and encouraging fiscal 2027 outlook. Twilio (NYSE:TWLO) stock is also up 27% to $245.80, while Cloudflare (NYSE:NET) stock has advanced 9% to $310.06 following strong quarterly results and an improved outlook.
The broader market is providing a favorable backdrop, with the NASDAQ 100 tracking Invesco QQQ Trust (NASDAQ:QQQ) up 0.66% to $719.24. A weaker-than-expected July jobs report has reduced expectations for a September interest-rate hike, giving investors another reason to favor growth-oriented technology stocks.
Atlassian Emerges As an AI Beneficiary
Atlassian stock is leading the software-sector rally after the company finished fiscal 2026 on a strong note and provided a better-than-expected cloud growth outlook for fiscal 2027. Bank of America upgraded Atlassian to Buy from Neutral and raised its price target to $175 from $105, arguing that the company’s workflow and collaboration data could become an increasingly valuable AI asset.
Jefferies also raised its price target to $200 from $150, pointing to 31% cloud revenue growth in the fourth quarter and fiscal 2027 guidance for 25.5% growth. Wells Fargo raised its target to $180 from $140, saying the results reduced concerns about declining developer seats while highlighting Atlassian’s increasingly important role in an AI-driven software market.
Twilio Gets a Beat-And-Raise Boost
Twilio stock is surging after the communications-platform company delivered what Bank of America described as a “beat-and-raise” second-quarter report. Bank of America raised its TWLO stock price target to $270 from $235 and maintained a Buy rating, arguing that Twilio’s long-term growth potential as a share gainer in the communications-platform-as-a-service market remains underappreciated.
Furthermore, Jefferies raised its target to $240 from $195 and said Twilio “delivered in spades” despite a high bar following its strong first quarter and sharp year-to-date rally. Wells Fargo also raised its target to $275 from $225, citing reacceleration in Voice and organic revenue as signs that Twilio’s fundamentals are improving.
Cloudflare Benefits From AI Demand
Cloudflare stock is also climbing following strong second-quarter results, accelerating revenue growth and higher guidance. Goldman Sachs raised its NET stock price target to $389 from $266, pointing to agentic AI adoption, rapid expansion of the Workers platform and emerging opportunities tied to what it described as a new internet business model.
Meanwhile, TD Cowen raised its target to $355 from $300, highlighting 36% year-over-year revenue growth and record net additions across large customer tiers and contracts. Wells Fargo lifted its target to $380 from $300, while UBS raised its target to $350 from $250 and cited accelerating growth, higher fiscal 2026 guidance, improving margins and strong go-to-market execution.
Software Stocks Find Multiple Catalysts
The common thread among Friday’s biggest software-sector winners is that each company has delivered a company-specific catalyst that is helping investors rethink its growth outlook. Atlassian is benefiting from stronger cloud expectations and growing optimism around its AI opportunity, Twilio is showing improving fundamentals and AI-related momentum, and Cloudflare continues to demonstrate strong demand across its platform.
The broader market backdrop is helping to amplify those gains, particularly with investors now seeing less risk of an immediate interest-rate increase. Still, the size of Friday’s moves means expectations are rising quickly, and investors will need to see continued execution to justify the higher valuations.
Investors can watch whether Atlassian sustains its cloud growth, Twilio continues its revenue reacceleration and Cloudflare maintains its AI-driven momentum. Given the magnitude of the gains, investors choosing to participate in these software stocks may want to keep their share-position sizes small rather than load up after sharp one-day rallies.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.
His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.
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