Bill Gurley, a benchmark general partner, recently cautioned investors about a potential bubble in artificial intelligence infrastructure during a CNBC interview, advocating for a pivot towards undervalued software-as-a-service (SaaS) stocks. Echoing this sentiment, NYU Professor Scott Galloway suggested that fears surrounding SaaS stocks have been exaggerated, presenting a buying opportunity.
Among the SaaS candidates, ServiceNow (NOW) stands out with a robust revenue growth of over 20%, despite a nearly 25% decline year-to-date. Salesforce (CRM) and Workday (WDAY) also present compelling valuations, trading at forward price-to-sales multiples of below 4 and 3.5, respectively, while both face similar year-to-date declines. UiPath (PATH) and Adobe (ADBE) round out the list, with both companies showing promising early momentum in AI integration despite their respective stock price drops.
For market professionals, the key takeaway is that the current valuation levels of these SaaS stocks may present attractive entry points, particularly as they leverage AI advancements to drive future growth.
Source: fool.com