Benchmark general partner Bill Gurley recently warned investors in a CNBC interview about a potential artificial intelligence (AI) infrastructure bubble and recommended shifting investments into beaten-down software-as-a-service (SaaS) stocks. NYU Professor Scott Galloway recently expressed a similar sentiment that fears over SaaS stocks were overdone, and it’s time to buy.
Let’s look at five SaaS stocks to consider.
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ServiceNow(NYSE: NOW) is the backbone of many organizations’ workflow in the areas of information technology, human resources, and customer service. It serves as an important system of record ingrained within customers and thus is not easily replicated or replaced. The company is still growing its revenue by more than 20% and has seen strong momentum with its AI solutions. More recently, the company is working to become an agentic AI orchestration layer through its new Tower control product.
The stock is down nearly 25% year to date and trades at a forward price-to-sales (P/S) multiple of 7.5 times and a forward price-to-earnings (P/E) ratio of 28 times.
A leader in customer relationship management software, Salesforce(NYSE: CRM) has always been good at breaking down departmental data silos. However, it has taken this to a new level with the launch of Data 360, which can instantly grab data from cloud providers and data warehouses. Its acquisition of Informatica, meanwhile, gave it the plumbing to pull in data from hard-to-reach legacy systems. This positions the company as an organization’s master of records from which AI agents can draw data to avoid any potential hallucinations. The company is expecting to grow its revenue at a more-than 10% annual rate through 2030.
The stock price is down more than 25% year to date and trades at a forward P/S multiple of below 4 times and a forward P/E of below 15 times.
As with ServiceNow and Salesforce, Workday‘s (NASDAQ: WDAY) advantage is also all about data. The company is the leader in human resources and finance data, and like other SaaS companies, it is tapping into AI agents and tools to help drive growth. Its new annual contract value for AI solutions doubled last quarter to $100 million, and it recently introduced 12 role-based agents that it is making generally available. The company is expected to grow its revenue in the mid-teens this year.
The stock is down more than 35% year to date and trades at a forward P/S multiple of below 3.5 times and a forward P/E of below 13 times.
UiPath(NYSE: PATH) is a leader in robotic process automation (RPA) that has developed an agentic AI orchestration platform. Its Maestro system can manage both simple software bots and AI agents, and assign them the tasks for which each is best suited. This can help customers save money, as software bots can perform repetitive, rules-based tasks at a cost much lower than AI agents. The company is in the early stages of its transition to an agentic AI orchestration platform but is seeing good early momentum, with its new annual recurring revenue (ARR) growth accelerating for the first time in several years last quarter.
The stock is down more than 25% year to date and trades at a forward P/S multiple of just above 3.5 times and a forward P/E of 15 times.
Creative software provider Adobe(NASDAQ: ADBE) continues to be the leading platform for creative professionals and has seen steady revenue growth in the low double digits. The company’s AI annual ARR growth has been strong, more than tripling last quarter, while it has seen a large increase in generative credit consumption. While the company is starting to evolve more toward a consumption-based model, it shows no signs of being disrupted by AI.
The stock is down more than 25% year to date and trades at a forward P/S multiple of 4 times and a forward P/E of below 11 times.
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Geoffrey Seiler has positions in Salesforce, ServiceNow, and UiPath. The Motley Fool has positions in and recommends Adobe, Salesforce, ServiceNow, UiPath, and Workday. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.
