Over the past two years, software-as-a-service (SaaS) stocks have fallen. The popular narrative is that artificial intelligence (AI) will make the software stack redundant or, at the very least, negatively impact their user-based pricing models. While these companies have continued to show solid growth, nothing has been enough to change the narrative in the eyes of investors.
However, with SaaS stocks starting to rally, it looks like the sector has finally bottomed out. With the downside behind these stocks, let’s take a look at three SaaS stocks to buy right now.
1. Microsoft: An Early AI Leader
Microsoft (MSFT 2.55%) It was one of the first companies to embrace AI and bring it into the mainstream with a major investment and partnership with OpenAI. However, this does not completely free the company from selling SaaS.
Although Microsoft’s stock has lagged the market, its operating performance has been strong. Its Microsoft 365 business business is gaining traction, with enterprises quickly adopting its Copilot AI assistant. Last quarter, the company saw a 250% year-over-year jump in paid Copilot users to 20 million. Overall, its software business grew its revenue by an impressive 17%.
Today’s change
(-2.55%) $-10.90
Current price
$417.14
Key data points
Market Cap
$3.1T
Day limit
$414.40 – $429.47
52 week limit
$356.28 – $555.45
Vol
1.7M
Average Vol
34.4M
gross margin
68.31%
Dividend yield
0.85%
At the same time, its Azure cloud computing business is on fire, with revenue up another 39% last quarter. Microsoft’s annual recurring AI revenue, meanwhile, rose 123%, with the company saying it was seeing “unprecedented growth” driven by its GitHub solution agent coding.
As a company committed to its customers’ workflows, Microsoft looks like an AI winner, not a loser.
Image Source: Getty Images.
2. ServiceNow: Must be an agent AI orchestration platform
SaaS stocks that are AI winners are deeply embedded in their customers’ data and workflows. No company fits this description better Service now (Now 5.77%)The platform IT departments use to run their entire software stack.
An enterprise configuration management database (CMDB) is an indispensable system of record that catalogs the structural relationships between hardware, software, cloud services, and business processes. It is something that cannot be easily changed or replicated. The CMDB also serves as the foundation for the company’s larger push to become an agent AI orchestration platform.
ServiceNow’s AI Control Tower solution not only identifies every AI agent and model running within an organization, but also monitors their performance, monitors security risks and ensures they adhere to governance rules.
Today’s change
(-5.77%) $-6.89
Current price
$112.47
Key data points
Market Cap
$116B
Day limit
$111.58 – $121.09
52 week limit
$81.24 – $211.48
Vol
1.3M
Average Vol
26.6M
gross margin
76.56%
The company has been a consistent 20%-plus revenue grower, and AI Control Tower adds another big potential growth driver. The age of agentic AI has arrived, and ServiceNow looks to be one of the best-positioned SaaS companies to benefit from this trend.
3. Salesforce: A leading AI agent platform
Another SaaS company looking to become an agent AI leader Salesforce (CRM 1.56%). The company has always excelled at breaking through sectorial data silos, but has quietly established itself as the critical master of record for AI agents.
This is done by introducing Data 360, which uses zero-copy technology to transfer data not only from an organization, but also from cloud providers and data warehouses without incurring time and cost. It acquired Informatica, a leading data management company, to clean, structure and manage this data.
Today’s change
(-1.56%) $-2.95
Current price
$185.80
Key data points
Market Cap
$152B
Day limit
$184.86 – $192.44
52 week limit
$163.52 – $276.80
Vol
872.8K
Average Vol
14 m
gross margin
75.12%
Dividend yield
0.91%
AI agents need clean, structured data to perform well and avoid costly hallucinations, and these maneuvers position Salesforce’s AgentForce platform as a leading agent AI solution. Agentforce is growing rapidly, although it is still in its infancy and has yet to significantly impact its revenue growth.
However, the overall opportunity is huge, and the stock remains in the bargain bin after rallying, with a forward price-to-sales (P/S) ratio of 3.5 and a forward price-to-earnings (P/E) ratio of 14 based on current-year analyst estimates.
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