SaaS Stocks Are Rallying on AI Optimism. 3 Stocks to Buy Now.
Written by Geoffrey Seiler for The Motley Fool -> Microsoft continues to see strong growth with both its software and cloud businesses. ServiceNow is seeing AI agent orchestration drive growth with its customers. Salesforce is well-positioned to become a leader in agentic AI.
Microsoft continues to see strong growth with both its software and cloud businesses.
ServiceNow is seeing AI agent orchestration drive growth with its customers.
Salesforce is well-positioned to become a leader in agentic AI.
Over much of the past couple of years, software-as-a-service (SaaS) stocks have been pummeled. The popular narrative has been that artificial intelligence (AI) will render the software layer unnecessary or, at the very least, negatively impact their user-based pricing models. Even as these companies continued to show solid growth, nothing was often good enough in the eyes of investors to change the narrative.
However, it looks like the sector has finally hit a bottom, with SaaS stocks starting to rally. With the worst possibly behind these stocks, let's look at three SaaS stocks to buy right now.
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Microsoft (NASDAQ: MSFT) was one of the first companies to really embrace AI and bring it to the mainstream with a large investment in and partnership with OpenAI. However, that hasn't completely spared the company from the SaaS sell-off.
While Microsoft's stock has lagged the market, its operational performance has been strong. Its Microsoft 365 Commercial business has been gaining traction, with enterprises rapidly adopting its Copilot AI assistant. Last quarter, the company saw a huge 250% year-over-year jump in paid Copilot users to 20 million. Overall, its software business grew its revenue by an impressive 17%.
