Are SaaS stocks good long-term investments?

Yes, some SaaS stocks have been great long-term investments, having delivered multibagging returns, though there have also been plenty of losers in the sector, as well.

Do SaaS companies pay dividends?

Most SaaS companies don't pay dividends, though some do. Many SaaS companies aren't profitable, and many of the ones that are profitable choose to invest their profits into growth.

What are the tax implications of investing in SaaS stocks?

The tax implications of investing in publicly traded SaaS stocks are the same as they are for any other stock. If you earn money from them in a taxable account, you must pay tax on capital gains or dividend income.

What is the biggest SaaS company?

By market cap, the biggest pure-play company as of Sept. 2026 was Palantir. By revenue, it was Salesforce.

Yes, there are some SaaS ETFs. Among them are the Global X Cloud Computing ETF (NASDAQ:CLOU), First Trust Cloud Computing ETF (NASDAQ:SKYY), and iShares Expanded Tech-Software Sector ETF (NYSEMKT: IGV).

Are SaaS stocks affected by economic downturns?

Yes, SaaS stocks are affected by economic downturns. While their subscription business model gives them some protection against downturns, in a recession, businesses tend to pull back on spending and are less likely to renew or expand expensive software contracts.

How can I diversify my SaaS stock investments?

There are different subsectors within SaaS, so you can diversify with stocks in areas like CRM, e-commerce, cybersecurity, fintech, and others. While they will be subject to some of the same macro trends, doing so will give you some diversity if you want to own SaaS stocks. You can also consider investing in an ETF like Global X Cloud Computing ETF.

Best SaaS Stocks of 2026 and How to Invest in Them

Best SaaS Stocks to Buy in 2026 and How to Invest in Them

By Jeremy Bowman – Updated Sep 7, 2026 at 4:10 PM EST | Fact-checked by Frank Bass

Key Points

SaaS stocks like Microsoft and Adobe thrive on subscription models, ensuring steady revenue growth.
Revenue and earnings for companies like Salesforce continue growing, supported by their SaaS frameworks.
Investing in carefully selected SaaS stocks offers long-term growth, despite AI pressures.

The subscription business model now dominates much of the software industry and that has fueled the rise of software-as-a-service (SaaS) stocks. SaaS companies sell cloud-based software through subscriptions, delivering regular updates to customers and recurring revenue to the business.

That steady revenue has fueled strong investor interest. Many SaaS stocks still trade at premium valuations, a trend that accelerated during the pandemic, though AI start-ups like Anthropic have pressured valuations more recently. Paying too much can limit long-term returns, but not every SaaS company is priced for perfection. A handful offer more reasonable valuations alongside solid growth potential.

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A graphic comparing the similarities and differences between the software-as-a-service model and the traditional model. — Image source: The Motley Fool.

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Best SaaS stocks in 2026

If you want to invest in SaaS companies that are reasonably valued, these seven options, Microsoft, Adobe, Salesforce, Shopify, Palantir, ServiceNow, and CrowdStrike, are a good place to start.

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Ticker Information Table
Company	TickerMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Dividend yield	Industry
Microsoft (NASDAQ:MSFT)	$3.7 trillion	0.73%	Software
Adobe (NASDAQ:ADBE)	$105.9 billion	0.00%	Software
Salesforce (NYSE:CRM)	$213.3 billion	0.66%	Software
Shopify (NASDAQ:SHOP)	$186.7 billion	0.00%	IT Services
Palantir Technologies (NASDAQ:PLTR)	$418.9 billion	0.00%	Software
ServiceNow (NYSE:NOW)	$146.1 billion	0.00%	Software
CrowdStrike (NASDAQ:CRWD)	$218.2 billion	0.00%	Software

Data as of Sep 8, 2026. Showing 7 of 7 total entries.

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1. Microsoft

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NASDAQ: MSFT

Microsoft

Premium Feature

Moneyball Superscore

93/100

Today's Change

(-2.04%) $-10.42

Current Price

$499.70

Key Data Points

Market Cap

$3.7T

Day's Range

$499.36 - $511.00

52wk Range

$349.20 - $553.72

Volume

18.1M

Avg Vol

36.8M

Gross Margin

67.94%

Dividend Yield

0.73%

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2. Adobe

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NASDAQ: ADBE

Adobe

Premium Feature

Moneyball Superscore

80/100

Today's Change

(-6.73%) $-19.24

Current Price

$266.51

Key Data Points

Market Cap

$106B

Day's Range

$263.93 - $275.91

52wk Range

$190.12 - $370.86

Volume

6.6M

Avg Vol

6.2M

Gross Margin

88.82%

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Best known for its creativity software, such as Photoshop, Adobe (ADBE -6.73%) has historically set industry standards. Cheaper and even free Adobe alternatives are available, but that hasn't been enough to derail the software giant's market leadership.

Adobe has gone all-in on subscriptions, announcing back in 2013 that it would stop developing new versions of its stand-alone creative software in favor of selling subscription products. The move has paid off in a big way, with Adobe's revenue reaching almost $23.8 billion in its fiscal year 2025, up from just $4 billion in 2013.

Transitioning from selling one-off licenses for hundreds of dollars to selling subscriptions costing as little as $10 per month has made the company's software available to a much wider audience.

Adobe's growth rate has moderated in recent years, but the company has established a sustainable competitive advantage with products like Photoshop, Acrobat, Illustrator, and other similar programs. Revenue rose 10.5% in fiscal 2025, and adjusted earnings per share (EPS) rose 14% to $20.94 as it repurchased 5% of shares outstanding.

The company expects the top line to increase at a similar rate next year, and Adobe looks well-positioned for long-term growth despite any potential competition.

3. Salesforce

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NYSE: CRM

Salesforce

Premium Feature

Moneyball Superscore

83/100

Today's Change

(-1.97%) $-5.20

Current Price

$259.23

Key Data Points

Market Cap

$213B

Day's Range

$257.82 - $263.60

52wk Range

$146.32 - $269.11

Volume

10.5M

Avg Vol

15.1M

Gross Margin

74.69%

Dividend Yield

0.66%

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Salesforce (CRM -1.97%), the provider of cloud-based customer relationship management software, is a SaaS pioneer. The company went public in 2004, and has grown its annual revenue to $41.5 billion in fiscal 2026, which ended in Jan. 2026, up 9.6% from the year before. Continued growth in the core business and new artificial intelligence (AI) products like Agentforce are expected to push revenue close to $46 billion in fiscal 2027.

Salesforce is not as profitable as Microsoft or Adobe, partly because it spends almost half its revenue on customer acquisition to sustain its growth. Salesforce shares have surged over their history as the SaaS business model has become the industry standard. As it invests in AI and leverages the multi-brand business model, Salesforce should continue to see steady growth.

4. Shopify

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NASDAQ: SHOP

Shopify

Premium Feature

Moneyball Superscore

88/100

Today's Change

(-0.54%) $-0.79

Current Price

$145.09

Key Data Points

Market Cap

$187B

Day's Range

$144.49 - $149.43

52wk Range

$94.00 - $182.19

Volume

6.9M

Avg Vol

8.9M

Gross Margin

47.61%

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Shopify (SHOP -0.54%) is one of the most valuable SaaS stocks on the market, having established itself as the clear leader in e-commerce software. Founder Tobi Lutke was early to recognize the opportunity in the space, as he originally started a snowboard shop and built his own software to run the sales apparatus when he couldn't find a suitable alternative.

Over the years, the company has grown by adding new functionalities, handling everything from marketing to payments and fulfillment. These days, Shopify has also established itself as a leader in AI for e-commerce, demonstrating its consistent efforts to improve its product, which helps attract more merchants and earn higher price points.

Shopify continues to deliver solid growth, with revenue up 30% to $11.6 billion in 2025, and its runway remains promising.

5. Palantir Technologies

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NASDAQ: PLTR

Palantir Technologies

Premium Feature

Moneyball Superscore

87/100

Today's Change

(-4.49%) $-8.20

Current Price

$174.33

Key Data Points

Market Cap

$419B

Day's Range

$173.67 - $182.19

52wk Range

$106.37 - $207.52

Volume

28M

Avg Vol

40.8M

Gross Margin

84.80%

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Palantir (PLTR -4.49%) is best known for its work in counterterrorism and assisting the government, but the company's business model clearly falls into the SaaS category. It sells subscriptions to its software platforms, which help government agencies and businesses analyze large data sets and connect the dots between silos.

In 2023, the company introduced its Artificial Intelligence Platform (AIP), an AI layer that works with its other platforms. That move has supercharged its growth, with revenue growth accelerating to 56% in 2025, reaching $4.48 billion, and profit margins aggressively expanding.

Palantir was also the best-performing stock on the S&P 500 in 2024 and was one of the top-performing ones in 2025 as well, though it has faded in 2026 due to concerns about valuation and the threat from AI. Still, its growth has continued to accelerate in 2026, showing it's built a compelling software platform that has found an audience with the U.S. government and commercial sector.

6. ServiceNow

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NYSE: NOW

ServiceNow

Premium Feature

Moneyball Superscore

86/100

Today's Change

(-2.97%) $-4.33

Current Price

$141.26

Key Data Points

Market Cap

$146B

Day's Range

$138.80 - $145.26

52wk Range

$81.24 - $194.73

Volume

12.5M

Avg Vol

22.3M

Gross Margin

74.77%

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ServiceNow is one of the largest and most established software-as-a-service companies in the world, and handles a wide variety of functions for enterprises, including IT service, IT operations, customer service, HR, and more.

Like other SaaS stocks, ServiceNow has plunged of late, falling through 2025 and early 2026, but the company continues to deliver strong results.

In 2025, revenue rose 21% to $13.3 billion, and the company has improved its generally accepted accounting principles (GAAP) margins lately, reporting $1.75 billion in net income, or $1.69 per share. For 2026, the company expects 22.5% subscription revenue growth to around $15.8 billion.

ServiceNow is embracing AI, partnering with Anthropic and OpenAI, deploying AI agents, and launching an AI control tower, which gives customers an easy way to manage their AI tools. Still, investors see it as a target for AI disruption, which explains why it's down sharply from its peak in late 2024.

7. CrowdStrike

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NASDAQ: CRWD

CrowdStrike

Premium Feature

Moneyball Superscore

85/100

Today's Change

(-0.87%) $-1.87

Current Price

$213.10

Key Data Points

Market Cap

$218B

Day's Range

$211.32 - $218.31

52wk Range

$85.68 - $233.88

Volume

8.4M

Avg Vol

10.3M

Gross Margin

75.12%

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CrowdStrike is a leading cybersecurity provider and software-as-a-service company, best known for its Falcon endpoint security platform, which uses AI to prevent breaches, malware, and ransomware across endpoints such as laptops, servers, and cloud workloads.

CrowdStrike has a long history of delivering strong growth and in fiscal 2026, the company reported 22% revenue growth to $4.81 billion, though it's still unprofitable on a GAAP basis.

Looking ahead to fiscal 2027, the company expects $5.99 billion-$6.01 billion in revenue, or 25% growth. Cybersecurity is generally considered to be more resilient to AI disruption than other types of SaaS companies, which should give CrowdStrike an advantage going forward.

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How to invest in SaaS stocks

Open your brokerage app: Log in to your brokerage account where you handle your investments.
Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

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Benefits and risks of investing in SaaS stocks

Like other stock market sectors, SaaS stocks have their own set of characteristics that any investor considering them should understand. Let's take a look at some of the benefits and risks of SaaS stocks.

Benefits:

SaaS stocks tend to have high growth rates.
SaaS stocks tend to earn high multiples, meaning they can be worth a lot with relatively low revenue or profits.
SaaS stocks typically have high gross margins and scalable business models, meaning their profit margins should improve as they grow.
The total addressable market for SaaS stocks is promising, especially with the help of AI.

Risks:

SaaS stocks' high multiples make them vulnerable to multiple compression and pullbacks.
The sector is cyclical and has a history of sharp declines during bear markets.
It's a highly competitive industry, and competitive advantages may not be as strong as they seem.
Profits are often inflated due to adjustments for things like share-based compensation.

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Did You Know?

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Should you invest in SaaS stocks?

Some of the top-performing stocks in the last ten years have been SaaS companies, including Shopify and, more recently, Palantir.

However, the risks facing the sector from AI are real, and valuations are unlikely to reach previous record levels. There are still good opportunities in the sector, but investors should be tactical, buying when the price is attractive, and be mindful of the AI threat, which is now having a real impact on some smaller SaaS stocks.

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FAQ: SaaS stocks

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

TMFHobo

@TMFBowman

Jeremy Bowman has positions in CrowdStrike and Shopify. The Motley Fool has positions in and recommends Adobe, Alphabet, CrowdStrike, Microsoft, Palantir Technologies, Salesforce, ServiceNow, and Shopify. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.

Best SaaS Stocks to Buy in 2026 and How to Invest in Them

Key Points

Best SaaS stocks in 2026

1. Microsoft

Key Data Points

2. Adobe

Key Data Points

3. Salesforce

Key Data Points

4. Shopify

Key Data Points

5. Palantir Technologies

Key Data Points

6. ServiceNow

Key Data Points

7. CrowdStrike

Key Data Points

How to invest in SaaS stocks

Benefits and risks of investing in SaaS stocks

Should you invest in SaaS stocks?

Related investing topics

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7 Best Cloud Computing Stocks for 2026 and How to Invest

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FAQ: SaaS stocks

About the Author

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Best Semiconductor Stocks for 2026 and How to Invest

5 Best Advertising Technology Stocks for 2026 and How to Invest

FAQ: SaaS stocks

Are SaaS stocks good long-term investments?

Do SaaS companies pay dividends?

What are the tax implications of investing in SaaS stocks?

What is the biggest SaaS company?

Is there a SaaS ETF?

Are SaaS stocks affected by economic downturns?

How can I diversify my SaaS stock investments?

1. Microsoft

2. Adobe

7. CrowdStrike

How to invest in SaaS stocks

Benefits and risks of investing in SaaS stocks

Should you invest in SaaS stocks?

Related investing topics

Best SaaS stocks in 2026

3. Salesforce

4. Shopify

5. Palantir Technologies

6. ServiceNow

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points

Key Data Points