Bernstein: Software crowdedness rebounds, remaining below long-term historical levels.

That Chaoxiang Research noted in its October 28, 2026 report that crowding in the software sector improved in the third quarter compared to July, but remains notably lower than historical levels over the past 25 years. As of October 19, among covered companies, Snowflake's standardized relative crowding score was 2.13, Datadog 1.80, Oracle -0.37, and HubSpot -1.55.

Bernstein believes that capital inflows are primarily concentrated in application platforms with stable or re-accelerating revenue, as well as usage-based software driven by increasing AI workloads. While the report is bullish on the business durability of select enterprise platforms, it retains concerns regarding growth and valuation divergence for popular stocks. Its stock-picking strategy focuses on operational improvements, AI monetization capabilities, and the gap between market confidence and fundamentals.