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Software - Infrastructure — industry outlook

  • Period: 2026-10-19 to 2026-11-09
  • Events: 29
  • Generated: 2026-11-09T07:30:00.003Z

AI-Driven Security and Infrastructure Investment

Major players are capitalizing on the shift from AI experimentation to production deployment, with demand driven by AI-powered attack vectors, sovereign compliance needs, and the necessity of runtime protection. Fortinet (FTNT) forecasts billings and revenue growth in 2027 to outpace the ~16% addressable market growth, citing a shift from point products to unified platforms for AI security; the company expects SASE firewall growth to nearly double the market rate, driven by the launch of "FortiGuard Inline AI Security Services" and the convergence of IT and OT. F5 (FFIV) reports direct AI use cases bookings exceeding $100 million in FY2026 (up ~300% YoY) and projects the addressable market for AI-related solutions to grow 10x from ~$1 billion in FY2026 to $11 billion by 2030, emphasizing that the "agentic era" creates new threat vectors requiring runtime protection rather than just training. F5 also anticipates "refresh-plus" cycles persisting into the first half of FY2027 to secure supply for AI data delivery, while Okta (OKTA) highlights the emergence of "AI teams" and "swarms" requiring intent-based authorization to secure autonomous decision-making, warning that unpatched security debt will be exploited as agents act as "highly capable insiders."

Agentic Commerce and AI Data Demand

Software infrastructure firms are pivoting strategies to support "agentic" workloads where agents perform recurring tasks, driving demand for specialized data infrastructure, payment rails, and marketing automation. DigitalOcean (DOCN) projects 60%+ revenue growth in 2027 on a higher base, noting that 90% of its AI revenue now comes from customers consuming core cloud primitives, with inference services growing ~600% YoY; the company expects agentic AI to lift global token consumption 24x by 2030. Backblaze (BLZE) identifies AI training and inferencing as key drivers for B2 cloud storage, with AI startups allocating ~15% of spend to data storage; the firm expects >40% B2 growth in 2027, supported by multi-year contracts with NeoClouds like CoreWeave. Bandwidth (BAND) views the shift to "Superintelligence" as a structural trend increasing the value of its network, anticipating that usage-based pricing models will scale with conversation volume as SI agents proliferate. Klaviyo (KVYO) reports that daily active accounts using its "Composer" AI agent have more than doubled, with usage tripling to 18 million weekly credits, positioning AI as a primary "landing point" for SMBs. Paymentus (PAY) and Klaviyo (KVYO) both emphasize "agentic commerce" as a validation of their secure, intelligent infrastructure, expecting benefits from increased digital payments driven by AI scaling.

Strategic Restructuring and Cost Optimization

A significant portion of the industry outlook focuses on cost transformation initiatives aimed at achieving margin expansion and operational efficiency, with several companies raising or reaffirming savings targets. REKOR Systems (REKR) is committed to delivering $110 million in total structural cost savings by the end of Fiscal Year 2027, having already realized $27 million in FY26. Fiserv (FISV) increased its savings target to $1 billion (up from $500 million), with incremental savings largely expected beyond 2027, aiming for a long-term adjusted operating margin of 37%. REZOLVE AI (RZLV) targets break-even adjusted EBITDA by exiting the first half of 2027, anticipating $60 million in annualized benefits from operational efficiencies and redundancy removal. Rapid7 (RPD) expects to realize ~$11 million in restructuring charges while exiting non-core product sales to focus on its core platform, aiming for a 20% non-GAAP operating margin exit for FY2026. OneSpan (OSPN) highlighted improved "Rule of 42" performance and doubled gross margins as validation of strategic investments in its new security framework.

Guidance Revisions and Revenue Trajectory

Companies are adjusting full-year and forward guidance based on mix shifts, specific customer contract impacts, and macroeconomic factors. Fiserv (FISV) reaffirmed adjusted revenue growth of -1.5% to -0.5% and adjusted EPS of $7.20 to $7.40 for FY2026, citing divestitures in student loan servicing and ATM services. Euronet Worldwide (EEFT) revised FY2026 revenue downward to ~$4.375 billion and adjusted EBITDA to ~$725 million due to persistent U.S. immigration enforcement pressure, though it maintains a long-term growth framework of 10–15% for 2027. Rapid7 (RPD) projected a ~2% revenue decline for FY2026 and a ~4% decline in Q4 2026, attributed to the runoff of non-core offerings, while expecting core Detection & Response (D&R) to grow ~5% YoY. Conversely, Pagaya (PGY) raised FY2026 adjusted EBITDA to $465–$485 million and net income growth to 112% YoY, expecting FRLPC margins to normalize to the 4.5% midpoint by end of Q4. Backblaze (BLZE) raised FY2026 revenue guidance to $177.8–$178.2 million, while F5 (FFIV) and Fiserv (FISV) also raised specific metrics or reaffirmed strong Q4 growth expectations.

Technology Integration and Product Innovation

Firms are integrating AI directly into core offerings, launching new products to capture specific market needs such as digital identity and financial wellness. OneSpan (OSPN) plans to launch "DigiPass One Verify" in Q1 2027 to support European Digital Identity Regulation mandates by December 2027, aiming to offset legacy token declines with FIDO2 adoption. Okta (OKTA) is launching a free version of its "NanoClaw" platform and shifting focus to securing "AI teams" rather than individual agents. Gen Digital (GEN) is integrating AI into Norton 360 and LifeLock, focusing on "AI-driven resolution" and financial wellness tools like MoneyLion, aiming to create a "flywheel" of trust. ACI Worldwide (ACIW) announced the launch of ACI Kinetic, with the first live customer operational in Q3 2026 and major implementations scheduled for 2027, focusing on ISO 20022 native payments and stablecoin settlement. Toast (TOST) is prioritizing the evolution from software tools to "agents" that perform work in marketing, scheduling, and inventory, with Toast IQ Grow on track to reach $10 million in ARR by end of 2026.

Macro Headwinds and Operational Risks

Several companies identified specific macroeconomic, regulatory, and supply chain challenges that could impact near-term performance. Euronet Worldwide (EEFT) cited U.S. immigration enforcement as the primary persistent headwind for U.S. outbound remittances, alongside FX volatility and the discontinuation of Steam physical gift cards, which creates a Q4 headwind offset gradually by GTA VI content in 2027. Pagaya (PGY) and REKOR Systems (REKR) both noted commodity volatility, with Pagaya highlighting the compressing impact of high interest rates on FRLPC margins and REKOR citing an "unprecedented tungsten environment." Bandwidth (BAND) acknowledged the cyclical nature of political messaging revenue, trimming FY2026 guidance by $3 million. Euronet (EEFT) and Fiserv (FISV) both highlighted regulatory and geopolitical risks, with Fiserv noting Argentina currency volatility and Euronet pointing to U.S. midterm elections and European unrest. AEye (LIDR) and DigitalOcean (DOCN) face supply chain risks regarding component lead times and data center power/capacity, respectively, with AEye relying on 12–18 month integration cycles for commercial conversions.

Capital Allocation and Shareholder Returns

Management teams are prioritizing share repurchases, dividends, and debt management to support capital efficiency and shareholder value. Gen Digital (GEN) plans to deploy ~$2 billion in annual free cash flow via buybacks and debt repayment, with $1.8 billion remaining in repurchase authorization. F5 (FFIV) authorized an additional ~$1.2 billion in stock repurchases, bringing the remaining authorization to $2 billion, with FY2027 repurchases expected to be at least 50% of annual free cash flow. OneSpan (OSPN) approved a $0.13 per share quarterly dividend and continues to evaluate share repurchase opportunities. Pagaya (PGY) expects aggregate secured borrowing costs to decline as new funding channels mature, while Euronet (EEFT) maintains a commitment to investment-grade leverage and disciplined buybacks ($50 million in Q3). REKOR Systems (REKR) retained its general approach to executive compensation with a performance-based emphasis for FY2027.