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.
Missed Nvidia in 2009? This rare signal will flash again. In 2009, a “double down” signal flashed for a little-known chipmaker, Nvidia. For the first time in years, the same “Total Confidence” signal is flashing for a company 1/100th higher than Nvidia. Continue »
1. Microsoft: An Early AI Leader
Microsoft (NASDAQ: MSFT ) 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%.
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.
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 (NYSE: NOW)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.
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