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StoneCo Ltd. (NASDAQ:STNE) is one of the oversold software stocks to buy according to Wall Street analysts. On May 14, StoneCo Ltd. (NASDAQ:STNE) shared its Q1 2026 results, reporting that total revenue rose 6.5% year over year to R$3.58 billion (about $679 million), which exceeded the R$3.55 billion that analysts expected. Adjusted EPS reached R$2.19, which although grew 15% year over year, it fell short of the R$2.28 consensus estimate.

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StoneCo stated that the revenue growth was driven primarily by its expanding credit business. The business generated R$297 million in credit revenues, up 25% quarter on quarter and 186% year on year. Healthy profitability in payments also contributed, noted StoneCo. It added that these gains more than offset a planned decline in deposit floating revenues, which the company had already begun redirecting as a lower-cost funding source in early 2025.

However, the company noted that the credit growth meant that provisions for credit losses surged and pushed the cost of risk to 21.9%. It also compressed the adjusted gross profit margin from 44.4% in Q1 2025 to 41.6% this quarter.

Because of this performance, StoneCo’s Board of Directors approved the payment of an extraordinary cash dividend of $2.53 per share. Only holders of Class A and Class B shares were eligible for the payment, which the company disbursed on May 4.

StoneCo Ltd. (NASDAQ:STNE) is a financial technology and software company. It provides payment processing, digital banking, and business management solutions for merchants in Brazil.

While we acknowledge the potential of STNE as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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