The software portion of the larger tech industry has recently experienced a sharp upward swing. A benchmark ETF, the iShares Expanded Tech-Software Sector ETF (BATS: IGV), has climbed by nearly 38% in the last year, with more than a quarter of that increase in the month from mid-October to mid-November.

This coincides with the period immediately surrounding the presidential election and may reflection an expectation of a looser regulatory environment going forward, largely seen as a potential boon for software developers.

Amid the broader rally, several niche software companies may warrant further investigation by investors considering a focus on this industry.

MDB: Leading Product in a Competitive Space

MongoDB Inc. (NASDAQ: MDB) provides software platforms for companies to use to store and analyze data more effectively. It offers a database-as-a-service tool, MongoDB Atlas, that allows clients from many different industries to manage databases remotely via the cloud.

For the second quarter of its 2025 fiscal year, MongoDB reported excellent workload acquisition, contributing to 13% year-over-year improvement to overall revenue. Atlas made up more than 70% of the $478 million in revenue the company generated during the year. While net losses widened slightly to $54.5 million, the company ended the quarter with a strong cash position of $2.3 billion.

MongoDB is positioning itself well in a rapidly growing, though niche, NoSQL database industry that is expected to reach more than $82 billion in size by 2031. On the other hand, though, the company will have to contend with significantly larger rivals that are also exploring offerings in the same space. Most notable in this category is Amazon.com Inc.'s (NASDAQ: AMZN) DynamoDB.

MongoDB has a "moderate buy" rating with 20 out of 26 analysts recommending that investors purchase shares. The consensus price target for MDB is $334.25, 14.1% higher than current levels.

CHKP: Cybersecurity Strength, But Recent Dip May Mean Buy Opportunity

Check Point Software Technologies Ltd. (NASDAQ: CHKP) creates cybersecurity software and a range of related products and services. In the latest quarter, the company posted 7% overall revenue growth to $635 million, including 12% year-over-year subscription revenue growth, even as Check Point executives acknowledged that several deals had been pushed to the fourth quarter and would be reflected in a later earnings report.

Despite this setback, Check Point reiterated its guidance of $2.5 billion in revenue for the year and net profit of over $1 billion. The company has also posted gross margin of 89% even as operating expenses have increased. This is all to say that Check Point has solid fundamentals and a popular cybersecurity product lineup.

Nonetheless, shares of CHKP fell following the earnings announcement in late October. This is understandable given that the report did not dramatically exceed expectations and that the company's stock traded around a 1-year high throughout most of the month in anticipation of new executive leadership.

Now, even though Bank of America has recently downgraded Check Point to "neutral" from "buy" previously, a relatively lower share price means analysts see shares rising by about 12%. This could be an opportune moment for investors to buy in.

TYL: Promising Trends But Mixed Earnings

Tyler Technologies Inc. (NYSE: TYL) provides software and services to public sector organizations to aid in cybersecurity efforts, data analysis, payments solutions, and more. In the latest quarter, Tyler's revenue climbed by almost 10% year-over-year, driven by increased demand for its software as a service (SaaS) options. Transaction revenues grew by more than 15% thanks to higher volumes from both new and returning customers.

These signs point to Tyler's successful implementation of its cloud-based strategy, which it intends to continue to develop going forward. And yet, there are reasons to be cautious as well: while the company boosted its guidance range for GAAP diluted EPS for 2024, it reduced its expected free cash margin and slightly lowered the top end of its full-year revenue guidance as well.

Assessing Risk

As each of the firms above contests with larger, more established rivals, there is both the potential for growth and the risk of failure to overcome these obstacles. Each of the companies has analyst votes of confidence, but each also has potential disadvantages for an investor as well.