We recently published a list of 10 Best SaaS Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Dropbox Inc. (NASDAQ:DBX) stands against other best SaaS stocks to buy according to billionaires.
Software-as-a-Service (SaaS) is a steadily growing segment of cloud computing that allows users to access software applications over the internet without the need for local installation. Instead of purchasing expensive software licenses, businesses and individuals can subscribe to these applications on a pay-as-you-go basis. SaaS solutions offer flexibility, cost savings, and scalability while eliminating the need for companies to manage infrastructure, security, and software updates. With businesses increasingly relying on cloud-based solutions, the SaaS market is poised for substantial growth in the coming years.
According to a September report by Kash Rangan, Head of US Software Research at Goldman Sachs Research, cloud computing sales are projected to reach $2 trillion by 2030. The total addressable market for cloud services is expected to expand at a compound annual growth rate (CAGR) of 22% between 2024 and 2030. A significant driver of this growth is generative AI, which could contribute between $200 billion and $300 billion in cloud spending as investment spreads beyond major tech firms and AI model providers.
The Head of Research further explained that cloud computing growth will begin with the infrastructure layer, which will then drive expansion in platforms and applications. He estimates that Infrastructure-as-a-Service (IaaS) will represent $580 billion, or 29% of the cloud market by 2030. Meanwhile, Platform-as-a-Service (PaaS) is projected to grow to $600 billion (30% of the market), and SaaS is expected to contribute the largest share at $780 billion, accounting for 41% of total cloud spending.
Their research also suggests that the initial beneficiaries of cloud adoption will be infrastructure providers, as seen with the AI revenue surge among hyperscalers. This will be followed by growth in the platform and application layers. There is a natural interdependence between PaaS and SaaS—platform solutions are essential for enabling next-generation applications, while the true value of the platform layer cannot be realized without compelling applications driving demand. The software sector, which has experienced three years of slowing growth, now has the potential to re-accelerate as cloud adoption and AI-driven innovations continue to evolve.
For investors looking to capitalize on this trend, SaaS stocks represent a strong long-term opportunity. As cloud adoption continues to expand, leading SaaS companies are well-positioned to benefit from rising enterprise demand, AI integration, and increased digital transformation across industries. With SaaS projected to be the dominant cloud computing segment by 2030, investors may find significant value in high-growth SaaS stocks that are shaping the future of software solutions.
Our Methodology
To identify the 10 best SaaS stocks to buy according to billionaires, we first compiled a list of SaaS-focused stocks by reviewing ETFs and financial media reports. We specifically selected companies with significant exposure to the SaaS business, excluding enterprise and application software firms with relatively low SaaS exposure (which are covered in a separate article). From this refined list, we analysed Insider Monkey’s database of billionaire holdings to determine which SaaS stocks were most favoured by billionaire investors. We then ranked the top 10 stocks in ascending order based on the number of billionaire investors holding positions in each company as of Q4 2024. Additionally, we also provide data to assess hedge fund sentiment surrounding these stocks, utilizing data from Insider Monkey’s Q4 2024 hedge fund database to provide deeper insights into institutional investor trends.
Note: All pricing data is as of market close on March 15.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a laptop displaying a popular content collaboration platform.
Dropbox Inc. (NASDAQ:DBX)
Number of Billionaire Investors: 13
Billionaire Holdings: $548 Million
Number of Hedge Fund Holders: 36
Dropbox Inc. (NASDAQ:DBX) is a cloud-based platform for file storage and collaboration, allowing users to store, sync, and share files across multiple devices. It offers productivity solutions for individuals and businesses, including Dropbox Paper, HelloSign, and integrations with third-party applications.
In Q4 2024, Dropbox Inc. (NASDAQ:DBX) reported revenue of $643.6 million, reflecting a 1.4% year-over-year (YoY) increase. Adjusted gross margin improved to 83.2%, up 80 basis points YoY, while adjusted operating margin expanded by 470 basis points to 36.9%. As a result, adjusted EPS surged 46% to $0.73. Dropbox Inc. (NASDAQ:DBX) is restructuring its core operations and optimizing costs, driving earnings growth. Additionally, it is scaling and promoting its AI-powered product, Dash for Business, to support revenue expansion. The company generated over $210 million in free cash flow during the quarter, marking an 11% YoY increase. However, a projected decline of approximately 300,000 paid users in 2025 has led analysts to take a cautious stance on near-term growth.
Dropbox Inc. (NASDAQ:DBX) currently has a consensus 1-year median price target of $29, suggesting a 10% upside potential. Following its earnings report, RBC Capital analyst Rishi Jaluria reaffirmed a Buy rating, assigning a consensus-high price target of $32.
Overall, DBX ranks 10th on our list of best SaaS stocks to buy according to billionaires. While we acknowledge the potential of DBX to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DBX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
