Citi has named three software firms as its leading sector picks, focusing on companies with substantial exposure to cloud and data infrastructure that are positioned to capture enterprise AI-related spending. The investment bank argues that as corporate budgets tighten and prioritize platforms that show measurable returns, spending acceleration is clustering among a narrow group of infrastructure providers rather than spreading across the broader software market.
Summary
Citi's selections prioritize firms supporting the move to cloud-native, AI-ready architecture. The bank sees these businesses as differentiated from commoditized application software that is facing heightened return-on-investment scrutiny. The three companies Citi highlights are MongoDB, Snowflake and Palantir.
Why infrastructure and cloud-native platforms matter
Citi's analysis stresses that the current wave of enterprise AI spending is flowing to layers of the technology stack that can handle AI data demands and integrate with cloud-native architectures. The firm distinguishes providers of cloud and data infrastructure from application software vendors, saying that genuine spending acceleration is concentrated among the former group. That selective spending creates a competitive backdrop in which vendors that can demonstrate clear ROI stand to benefit.
MongoDB
Citi lists MongoDB among its top software picks based on the company's exposure to cloud and data infrastructure. The bank highlights Atlas, MongoDB's cloud database platform, as continuing to take share as enterprises migrate workloads from legacy databases to cloud-native, AI-ready architectures. Citi notes that the database layer is seeing tailwinds from developments such as vector search and AI-application development, which in turn are broadening customer adoption.
The bank views these dynamics as providing MongoDB with a durable growth runway even as spending remains selective in other areas of the software market. In company-reported results, MongoDB exceeded expectations in fiscal first quarter 2027, driven by 29% growth in Atlas. After releasing those results the company raised its full-year outlook, and a number of brokerages, specifically including Stifel and BofA Securities, subsequently raised their price targets.
Snowflake
Citi identifies Snowflake as another beneficiary of the enterprise AI-driven infrastructure buildout. The bank points to Snowflake's AI Data Cloud and its Cortex compute layer as being well placed to capture increasing AI-related data consumption. Citi categorizes Snowflake within the cloud and data infrastructure cohort that it believes is experiencing genuine spending acceleration, and contrasts this positioning with more commoditized application software that is subject to consolidation and closer ROI scrutiny.
Recent corporate developments underscore momentum: Snowflake announced that Unlimitail has chosen Snowflake's platform to power a new retail media network using Snowflake Data Clean Rooms technology. In addition, Truist Securities raised its price target on Snowflake, citing positive momentum.
Palantir
Citi named Palantir a top pick ahead of the company’s earnings report, citing its role in data infrastructure and enabling AI workloads as spending concentrates among a limited set of clear winners. The bank frames Palantir as well-situated because enterprise AI budgets are consolidating toward platforms that can demonstrate measurable return on investment rather than dispersing across a wide range of software providers.
Palantir has formalized a partnership with Rackspace Technology to deploy its AI platforms in regulated and sovereign environments. The company also announced an enterprise expansion agreement with GNP Seguros, which Citi notes is Mexico's largest insurer.
Implications for markets and sectors
Citi's selections highlight the market distinction between cloud and data infrastructure firms that are positioned to benefit directly from AI-driven consumption and broader application software vendors facing greater ROI scrutiny. The investment bank's view implies that capital and enterprise budgets may increasingly favor infrastructure layers capable of supporting AI workloads, influencing demand patterns across the software and IT services sectors.
Concluding observation
Overall, Citi's top software picks center on the idea that enterprise AI-related spending remains highly selective and concentrated among vendors that supply cloud-native, AI-ready infrastructure. MongoDB, Snowflake and Palantir are cited as primary beneficiaries within that narrow group, each with recent company developments that Citi and other market participants point to as evidence of momentum.