In this piece, we will take a look at the 14 best SaaS stocks to buy now. If you want to skip our overview of the SaaS industry, then take a look at the 5 Best SaaS Stocks To Buy Now.
The dot com era of the 1990s focused on the consumer side of the internet, but in the background, a quiet corporate revolution was also taking place. For that time, most people can only recall the growth in internet use and bulky personal computers most likely made by International Business Machines Corporation (NYSE:IBM) that could support CD disks, and flash drives, and came with a variety of accessories such as added speakers. However, the world was also seeing companies starting to rely on computers for their production, manufacturing, and supply chain planning as part of a broader group of corporate planning called enterprise resource planning (ERP).
Since then, not only have the computer and the internet made unbelievable advances, but the progress of the two has created a new industry. This industry is called software as a service (SaaS) and it includes software based products that can be accessed from anywhere on the planet given that one has a stable internet connection. These products enable users, whether corporate or consumer, to use a firm’s hardware infrastructure and simply pay a subscription for the usage. This comes with a variety of advantages, which include cost savings from avoiding buying bulky servers, hardware agnosticism for most of the parts except for basic specifications required for the user, and data security since all data is held on external servers.
If you’re having trouble understanding SaaS, then perhaps an example will help. The world’s most popular digital streaming service Netflix, Inc. (NASDAQ:NFLX) can also be classified as a SaaS. This is because all Netflix offers to its customers is a software product that can be accessed either through a computer or a smartphone. This simple software subscription enables access to television shows, movies, and documentaries – all of which are hosted on Netflix’s own servers. So, the consumers are saved from having to download and save TV shows on their own devices, and for most of the part, they can also access Netflix’s content from different locations without the need to carry their own computer or smartphone with them. Another popular example of a SaaS product is the online courses offered by firms such as
On the corporate side of things, SaaS is equally as diverse. A large number of business functions now rely on third party software which saves the operating from having to invest in its own products and allows them to leverage the expertise of others that are providing customized services in the area. Some business functions that utilize SaaS are payroll processing, human resource management, supply chain management, data analysis, and accounting. Each of these has specialized tasks that can be met by software, and in the case of the SaaS services provider, the software is often regularly updated over time to account for changes from user feedback and glitches. Some examples of corporate SaaS providers include PTC Inc. (NASDAQ:PTC), which provides product design software, Splunk Inc. (NASDAQ:SPLK) which provides data analysis products, and HubSpot, Inc. (NYSE:HUBS), which enables customer relationship management.
As to the latest trends in the SaaS industry, like nearly every other industry, it is also focusing on leveraging artificial intelligence to offer new services. For instance, HubSpot announced a new AI assistant in April 2023 to allow sales and marketing teams to create content. Additionally, one of the biggest SaaS security companies, CrowdStrike Holdings, Inc. (NASDAQ:CRWD), is also integrating AI into its Falcon platform, with management explaining during the firm’s second quarter of fiscal 2024 earnings call:
Falcon is a platform that brings the benefits of generative AI to life for every SOC, CISO, CXO and enterprise. We do it with proprietary threat data, and we do it with industry-leading AI expertise. Charlotte AI is the engine powering our portfolio of generative AI capabilities across the platform, utilizing CrowdStrike’s high-fidelity data advantage. Charlotte AI helps Falcon users of all skill levels to do more in the platform by automating workflows, which fuels module adoption and reduces the mean time to detect and respond. The net benefit to customers from our pioneering use of AI in a single platform is faster results, better security outcomes and lower overall cost, ushering in a new era of machine speed security. We showcased Charlotte AI earlier this month at Black Hat where we’re the only vendor of consequence to showcase a live, not PowerPoint, demo of generative AI in action.
Public reception was fantastic, and we will release Charlotte AI pricing at Falcon.
So, with AI transforming the SaaS industry, what are the best stocks to buy? We took a look and some top picks are Adobe Inc. (NASDAQ:ADBE), ServiceNow, Inc. (NYSE:NOW), and Salesforce, Inc. (NYSE:CRM). You can also read 12 High Growth SaaS Stocks that are Profitable and 10 Small Cap SaaS Stocks Hedge Funds are Piling Into for even more SaaS stocks.
Copyright: limonzest / 123RF Stock Photo
Our Methodology
To compile our list of the best SaaS stocks to buy, we ranked 30 stocks that were a part of our 30 Biggest SaaS Companies in the World in 2023 coverage and ranked them by the number of hedge funds that had held a stake in them as of Q2 2023. Out of these, the top stocks are the best SaaS stocks to buy.
14 Best SaaS Stocks To Buy Now
14. Autodesk, Inc. (NASDAQ:ADSK)
Number of Hedge Fund Investors In Q2 2023: 54
Autodesk, Inc. (NASDAQ:ADSK) is one of the biggest enterprise software providers in the world. Its products enable customers to collaborate online to manage data and contractor performance. The firm has either met or beat analyst EPS estimates in its four latest quarters and the shares are rated Buy on average.
During Q2 2023, 54 out of the 910 hedge funds part of Insider Monkey’s database had held a stake in Autodesk, Inc. (NASDAQ:ADSK). Out of these, the firm’s largest shareholder is William Von Mueffling’s Cantillon Capital Management since it owns 1.2 million shares that are worth $258 million.
Autodesk, Inc. (NASDAQ:ADSK) joins ServiceNow, Inc. (NYSE:NOW), Adobe Inc. (NASDAQ:ADBE), and Salesforce, Inc. (NYSE:CRM) in our list of the best SaaS stocks to buy.
13. HubSpot, Inc. (NYSE:HUBS)
Number of Hedge Fund Investors In Q2 2023: 57
HubSpot, Inc. (NYSE:HUBS) is a customer relationship management products provider that is headquartered in Cambridge, Massachusetts. The firm is bringing artificial intelligence capabilities to its platform to enable users to create better content for their marketing plans, and the stock is rated Strong Buy on average.
As of June 2023, 57 out of the 910 hedge funds part of Insider Monkey’s research were HubSpot, Inc. (NYSE:HUBS)’s investors. Colin Moran’s Abdiel Capital Advisors is the biggest shareholder among these due to its $604 million stake.
12. Okta, Inc. (NASDAQ:OKTA)
Number of Hedge Fund Investors In Q2 2023: 57
Okta, Inc. (NASDAQ:OKTA) is a California based company that enables organizational users to manage their employee identity and record processing functions. The firm sped up its plans to launch a consumer facing product in October after acquiring a password management software company.
After digging through 910 hedge funds for their second quarter of 2023 shareholdings, Insider Monkey discovered that 57 had owned a stake in the company. Okta, Inc. (NASDAQ:OKTA)’s largest investor in our database is Ricky Sandler’s Eminence Capital since it owns $103 million worth of shares.
11. MongoDB, Inc. (NASDAQ:MDB)
Number of Hedge Fund Investors In Q2 2023: 62
MongoDB, Inc. (NASDAQ:MDB) is a specialized SaaS company that provides database as a platform (DaaS) products to enable firms to maintain their operational records. Like other software companies, it is also upgrading its platform with AI features, and the firm announced in October 2023 that these features will allow users to efficiently transfer data to its platform.
During 2023’s second quarter, 62 out of the 910 hedge funds part of Insider Monkey’s research had invested in MongoDB, Inc. (NASDAQ:MDB). Larry Chen and Terry Zhang’s Tairen Capital is the firm’s biggest shareholder through a $205 million stake that comes via 500,453 shares.
10. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)
Number of Hedge Fund Investors In Q2 2023: 65
CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is a cloud software security products and services provider. It partnered up with another SaaS company in October to secure the latter’s cloud operations by enabling users to detect ransomware and other threats.
65 out of the 910 hedge funds researched by Insider Monkey had invested in the firm as of Q2 2023. CrowdStrike Holdings, Inc. (NASDAQ:CRWD)’s largest hedge fund investor is Jim Simons’ Renaissance Technologies since it owns 2.8 million shares that are worth $420 million.
9. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Investors In Q2 2023: 65
Snowflake Inc. (NYSE:SNOW) is a data management SaaS company that provides a cloud platform. The firm shed some light on the growth of AI in marketing in a September 2023 report which outlined that AI and machine learning use among marketers had grown by 15% annually.
Insider Monkey took a look at 910 hedge funds for their second quarter of 2023 investments to discover that 65 were Snowflake Inc. (NYSE:SNOW)’s investors. Brad Gerstner’s Altimeter Capital Management is the largest stakeholder in our database due to its $2.7 billion stake.
8. Block, Inc. (NYSE:SQ)
Number of Hedge Fund Investors In Q2 2023: 66
Block, Inc. (NYSE:SQ) is a payments platform provider whose SaaS services enable businesses to use software to analyze and understand customer transaction data to generate insights and drive growth. The firm’s second quarter results saw it beat analyst EPS estimates, and for the third quarter, the average EPS estimate is 44 cents.
Insider Monkey’s June quarter of 2023 survey revealed that 66 had held a stake in the company. Out of these, Block, Inc. (NYSE:SQ)’s biggest investor is Catherine D. Wood’s ARK Investment Management due to its $714 million investment.
7. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Investors In Q2 2023: 71
Workday, Inc. (NASDAQ:WDAY) is a software company that offers products for financial management and human resource management among others. The stock is rated Buy on average, and analysts have penned in a $30 share price upside based on the average share price.
By the end of this year’s second quarter, 71 out of the 910 hedge funds part of Insider Monkey’s research were Workday, Inc. (NASDAQ:WDAY)’s investors. Andreas Halvorsen’s Viking Global is the largest shareholder among these since it owns 3 million shares that are worth $686 million.
6. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Investors In Q2 2023: 74
Shopify Inc. (NYSE:SHOP) is another specialized SaaS company that provides retailers that sell products on its platform to design and develop their stores from the ground up. The firm expanded its platform in August 2023 when it announced that the blockchain payments platform provider Solana’s products would now be available on the Shopify platform.
74 out of the 910 hedge funds part of Insider Monkey’s Q2 2023 database had held a stake in the company. Shopify Inc. (NYSE:SHOP)’s biggest hedge fund investor is Catherine D. Wood’s ARK Investment Management due to its $573 million stake.
Adobe Inc. (NASDAQ:ADBE), Shopify Inc. (NYSE:SHOP), ServiceNow, Inc. (NYSE:NOW), and Salesforce, Inc. (NYSE:CRM) are some top SaaS stocks according to hedge funds.
Click here to continue reading and check out 5 Best SaaS Stocks To Buy Now.
Suggested articles:
- Wall Street Analysts Just Trimmed Price Targets for These 10 Stocks
- 16 Best Growth Stocks To Buy According To Hedge Funds
- AQR Capital Management: AUM, Performance, Stock Picks
Disclosure: None. 14 Best SaaS Stocks To Buy Now is originally published on Insider Monkey.
