The analyst team over at Wells Fargo recently sounded a bullish tone on enterprise software stocks for 2020. The thesis? Enterprise software spending trends will pick up over the next few quarters, and as they do, most enterprise software stocks will head higher, too.

For the record, I 100% agree with this thesis. Corporations hit the pause button on robust enterprise software spend in 2019 for two big reasons. One, they spent a lot on enterprise software in 2018 (spend rose nearly 14% year-over-year), so there wasn’t a glaring need to up spend further in 2019. Two, rising trade tensions created immense economic instability, and companies didn’t want to spend big against that backdrop.

Consequently, enterprise software spend rose just 8.8% in 2019 — one of its weakest annual growth rates in recent memory.

But, in 2020, corporations will re-accelerate their software spend, also for two big reasons. First, they didn’t grow spend as much as normal in 2019, so there is ample room to re-up spend growth in 2020. Second, trade tensions are easing, stability is being injected back into the global economic environment, interest rates globally remain low, and corporate spending conditions broadly remain as favorable as they’ve been since 2017.

As such, it should be no be surprise that Gartner projects global enterprise software spend to rise nearly 11% in 2019, up about 2 points from 2019’s growth rate.

Against that backdrop, enterprise software stocks will rally. Here are my favorite picks in the group.

Adobe (ADBE)

One enterprise software stock which Wells Fargo raised their price target on and which I think is a long-term winner is cloud giant Adobe (NASDAQ:ADBE).

In the big picture, there are a lot of things to like about Adobe. The company dominates in the creative and document cloud worlds, runs at sky high gross margins, has been growing revenues at a steady 20%-plus clip for several years, and is a cash flow and profit machine. But the upside bull thesis in ADBE stock is all about the company’s new growth potential in the enterprise cloud.

Specifically, everything in the enterprise world is pivoting towards a focus on the consumer experience, or CE. At the same time, CE is becoming increasingly visually-focused, because visuals do a much better job at immersing a consumer than words. Broadly, then, enterprises are putting more money into creating visually powerful CEs.

When they do that, they are trusting Adobe to do it better than anyone else. Why? Because Adobe has long been behind the market’s best-in-class media creation and editing tools, and is now leveraging its expertise in creative media to built robust media-based CEs for enterprises of all shapes and sizes.

This trend is just beginning. In 2020, it will gain serious momentum as enterprises increase their investment into CE. Adobe’s growth rates will move higher. Profits will keep roaring higher. And ADBE stock will soar to new highs above $350.

Autodesk (ADSK)

Wells Fargo really likes shares of architecture, engineering, and construction (AEC) software giant Autodesk (NASDAQ:ADSK). They hiked their price target on ADSK stock to a Street-high $240. ADSK stock presently trades around $195.

But, can ADSK stock — which is already up 140% over the past three years — rally another 25% over the next twelve months?

I think so. Autodesk dominates the AEC software vertical with widely-used and largely unparalleled solutions such as AutoCAD (used for 2D and 3D modeling) and Revit (used for Building Information Modeling). This dominant positioning means that as AEC firms up their software spend in 2020 — and they will, because AEC markets were among the hardest hit by trade issues — most of them will up spend on Autodesk services. Autodesk’s revenue, margin, and profit trends will consequently remain healthy over the next several quarters, and that will provide support for continued gains in ADSK stock.

It also helps that valuation isn’t that much of a problem for Autodesk. Realistically, this company is looking at over $6 in earnings per share by fiscal 2022 (current Street estimates sit around $6). Based on a 35-times forward earnings multiple, which is average for application software stocks, that implies a fiscal 2021 price target of at least $210 (keep in mind, Autodesk is almost at the end of fiscal 2020).

So is $240 achievable? I think so, mostly because as Autodesk keeps beating estimates, forward estimates will move up, and fiscal 2022 earnings per share estimates will shake out somewhere well north of $6 when all is said and done.

Microsoft (MSFT)

Wells Fargo also upped its price target on cloud giant Microsoft (NASDAQ:MSFT) and reiterated its “overweight” rating on the stock. I like this call, too, mostly because accelerating enterprise cloud momentum will support huge growth at Microsoft in 2020.

Long story short, Amazon (NASDAQ:AMZN) has long been the king of the cloud infrastructure market with Amazon Web Services. But, Microsoft’s cloud infrastructure offering, Azure, has been rapidly gaining on AWS for several years now. This culminated in late 2019, when the two services went head-to-head in a competition for a multi-billion dollar Pentagon cloud contract. Microsoft won.

It was a surprise victory from a company that has historically placed second in the cloud infrastructure market. And, it marks a critical pivot wherein Microsoft’s days as second place are coming to a close. In 2020, I expect multiple enterprises of all shapes and sizes to take note of Microsoft’s big Pentagon cloud contract win, and choose Azure over AWS as their public cloud infrastructure provider. The more this happens, the more momentum Azure will gain.

That’s great news for MSFT stock. Over the past few years, as goes the cloud sector, so goes Microsoft stock.

Splunk (SPLK)

Perhaps the boldest move from the Wells Fargo team in its recent software stocks update was upping its price target on big data company Splunk (NASDAQ:SPLK) to a Street-high $200, calling for another 30%-plus upside in shares over the next twelve months.

Can it happen? Yes. Mostly because the data boom is just starting.

In a nutshell, Splunk helps enterprises of all shapes and sizes turn their raw machine data into valuable and actionable insights through their Data-to-Everything platform. Three big trends will promote increased adoption of this platform over the next several years.

First, the volume of data globally will surge higher thanks to a proliferation of data-generating devices, like smart watches, smartphones, smart appliances, smart cars, etc. Second, the ability to generate valuable insights from that data will get better and better, thanks to things like machine learning. Third, enterprise data-driven decision making will go from luxury to necessity, as companies that don’t do it will be left behind the curve.

Broadly, then, Splunk projects to go from a niche data analytics platform today, to a must-have data-driven decision making companion by 2025. This transition will power sustained long term gains in Splunk stock.

Of note, in 2020, SPLK stock will be pushed higher by: 1) increased enterprise software spending trends, 2) continued migration from a legacy license model, to a cloud-based business model, and 3) a 5G boom accelerating the data growth narrative.

Overall, Splunk stock looks good both for 2020 and into 2025.

AS of this writing, Luke Lango was long ADBE.