We recently published a list of 10 Best SaaS Stocks to Invest In. In this article, we are going to take a look at where Intuit Inc. (NASDAQ:INTU) stands against other best SaaS stocks to invest in.
Mobile devices are now running more sophisticated and complicated software applications, which supports improving demand for SaaS solutions that can be accessed only with the help of an internet connection. As of now, continuous innovation has been helping businesses in running their operations globally. It continues to improve scalability and flexibility in data storage. Experts opine that the SaaS domain has been aiding in major decision-making and strategy-building as dynamic technologies such as AI and ML have been intersecting with it.
SaaS Growth Drivers for 2025
As per Fortune Business Insights, the global Software as a Service (SaaS) market size was pegged at US$273.55 billion in 2023 and is expected to grow from US$317.55 billion in 2024 to US$1,228.87 billion by 2032. The US SaaS market is expected to grow significantly, reaching an estimated value of US$236.69 billion by 2032, courtesy of the adoption of public and hybrid cloud-based tools by enterprises. Overall, the SaaS market growth is expected to be fueled by numerous factors such as an increase in the adoption of public & hybrid cloud-based solutions, integration with other tools, and centralized data-driven analytics.
As per Straits Research, increased demand for smart devices and their applications has been aiding the broader market. Notably, end-user demand for intelligent devices is supported by the expansion of email, instant messaging applications, and video calls. This is expected to contribute to the expansion of the SaaS market. Also, higher spending on cloud-based solutions by end-use businesses can accelerate the expansion of the broader SaaS industry over the upcoming years.
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Key Trends Likely to Help SaaS in 2025
With continuous advancements in technology, changing market demands, and increased dependence on cloud-based solutions, SaaS trends have been redefining the future of digital transformation for companies. Fortune Business Insights believes integrating AI and ML with SaaS Solutions will fuel broad-based market growth. This means that the adoption of AI/ML is expected to change the SaaS industry in many ways, mainly by improving the critical features of several software solutions. Notably, customizing & automating solutions, augmenting security, and improving human capacity are possible by incorporating SaaS solutions and AI/ML abilities.
Furthermore, SaaS has been continuously evolving and transforming services among cloud computing technologies. As per Fortune Business Insights, the key trending factors of SaaS are expected to continue to evolve and outline the future of cloud technologies, innovation, efficiency, and business values.
Our Methodology
To list the 10 Best SaaS Stocks to Invest In, we used a screener and scanned through several online rankings. Next, we chose the companies that were popular among hedge funds. Finally, the companies were arranged in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with 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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Intuit Inc. (NASDAQ:INTU)
Number of Hedge Fund Holders: 87
Intuit Inc. (NASDAQ:INTU) caters to the SaaS industry as it provides cloud-based software solutions via a SaaS model. Mizuho Securities analyst Siti Panigrahi has reiterated the bullish stance on the company’s shares, giving a “Buy” rating on January 10. This rating is backed by a combination of factors such as Intuit Inc. (NASDAQ:INTU)’s strategic focus on the tax business and potential for double-digit growth in the 2025 fiscal year. The company is focusing on a 2-pronged strategy to ramp up its TurboTax Live service and re-engage with low-end filers, which can fuel significant growth.
Notably, the pricing for TurboTax is largely consistent, but elevated usage of higher-priced services and reduced discounts can fuel its ARPR growth. With businesses and individuals shifting to cloud-based solutions for financial management, accounting, tax, and personal finance needs, Intuit Inc. (NASDAQ:INTU)’s SaaS products such as TurboTax, and QuickBooks Online are well-placed to address the growing demand. The company’s QuickBooks can cater to small businesses and larger companies, enabling them to expand within Intuit Inc. (NASDAQ:INTU)’s ecosystem as they scale up.
The company’s emphasis on operational efficiencies and subscription momentum can fuel continued margin expansion, with healthy operating margin growth expected for FY 2026. Also, the integration of GenAl technology throughout Intuit Inc. (NASDAQ:INTU)’s platform provides a significant opportunity for monetization and service enhancement. On December 19, Deutsche Bank maintained a “Buy” rating with a price target of $750.00. Parnassus Investments, an investment management company, released a Q3 2024 investor letter. Here is what the fund said:
“Intuit Inc. (NASDAQ:INTU) shares fell despite the financial software company posting strong quarterly results. The company’s pricing-dependent long-term guidance concerned investors. However, we continue to believe Intuit’s customer growth and relevant platform will sustain its wide moat and long growth runway.”
Overall, INTU ranks 2nd on our list of best SaaS stocks to invest in. While we acknowledge the potential of INTU as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than INTU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
