Wall Street Analyst Warns Of AI Bubble And Urges Investors To Buy SaaS Stocks. 5 Stocks To Buy If He's Right.

Benchmark general partner Bill Gurley recently warned investors about a potential artificial intelligence (AI) infrastructure bubble in a CNBC interview and recommended shifting investments to beaten software-as-a-service (SaaS) stocks. NYU professor Scott Galloway recently expressed a similar sentiment that fears about SaaS stocks were overblown and it’s time to buy.

Let’s take a look at five SaaS stocks to consider.

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ServiceNow (NYSE: NOW) is the backbone of many organizations’ workflow in information technology, human resources and customer service. It serves as an important system of record that is ingrained in customers and thus cannot be easily replicated or replaced. The company continues to grow 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 price-to-earnings (P/S) ratio of 7.5 times and a 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, with the launch of Data 360, it has taken this to a new level, allowing data to be retrieved directly from cloud providers and data warehouses. The acquisition of Informatica, meanwhile, gave the company the ability to extract data from hard-to-reach legacy systems. This positions the company as an organization’s master of records from which AI agents can pull data to prevent potential hallucinations. The company expects to grow its revenue by more than 10% annually through 2030.

The stock price is down more than 25% year to date and trades at a price-to-earnings multiple of less than 4 times and a price-to-earnings multiple of less than 15 times.

Similar to ServiceNow and Salesforce, Working day‘S (NASDAQ: WDAY) advantage is also about data. The company is a leader in HR and financial data and, like other SaaS companies, uses AI agents and tools to drive growth. New annual contract value for AI solutions doubled last quarter to $100 million, and 12 role-based agents were recently introduced and made 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 on a price-to-earnings ratio of less than 3.5 times and a forward price-to-earnings ratio of less than 13 times.

UiPath (NYSE: PAD) is a leader in robotic process automation (RPA) that has developed an agentic AI orchestration platform. The Maestro system can manage both simple software bots and AI agents, assigning them the tasks for which each is best suited. This can help customers save money because software bots can perform repetitive, rules-based tasks at a much lower cost than AI agents. The company is in the early stages of transitioning to an agentic AI orchestration platform, but is seeing good momentum, with new annual recurring revenue (ARR) growth accelerating last quarter for the first time in years.

The stock is down more than 25% so far this year and trades on a price-to-earnings ratio of just over 3.5 times and a price-to-earnings ratio of 15 times.

Creative software supplier Adobe (NASDAQ: ADBE) remains the leading platform for creative professionals and has seen steady low double-digit revenue growth. The company’s annual ARR growth in AI has been strong, more than tripling last quarter, while the company has seen a big increase in generative credit consumption. While the company is beginning to move toward a consumption-based model, it shows no signs of being disrupted by AI.

The stock is down more than 25% so far this year and trades on a price-to-earnings ratio of four times and a price-to-earnings ratio of less than 11 times.

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Geoffrey Seiler holds positions in Salesforce, ServiceNow and UiPath. The Motley Fool holds positions in and recommends Adobe, Salesforce, ServiceNow, UiPath, and Workday. The Motley Fool recommends the following options: long January 2028 $330 calls at Adobe and short January 2028 $340 calls at Adobe. The Motley Fool has a disclosure policy.

Wall Street analyst warns of AI bubble and urges investors to buy SaaS stocks. 5 stocks to buy if he’s right. was originally published by The Motley Fool