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 some 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 November 2025 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).

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

By Jeremy Bowman – Updated Jan 27, 2026 at 10:44 AM EST | Fact-checked by Frank Bass

Key Points

SaaS stocks offer ongoing updates and flexible pricing, driving significant tech sector growth.
High valuations of SaaS stocks can dampen investor returns despite company performance.
Invest in reasonably valued SaaS stocks like Microsoft, Adobe, and Salesforce for potential growth.

The software-as-a-service (SaaS) model now dominates much of the software industry. 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 growth across tech and strong investor interest. Many SaaS stocks still trade at premium valuations, a trend that accelerated after the pandemic. 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.

Loading paragraph...

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

Loading image...

Loading paragraph...

Ticker Information Table
Company	Ticker	Dividend yield	Industry
Microsoft (NASDAQ:MSFT)	$3.0 trillion	0.85%	Software
Adobe (NASDAQ:ADBE)	$115.9 billion	0.00%	Software
Salesforce (NYSE:CRM)	$183.5 billion	0.84%	Software
Shopify (NASDAQ:SHOP)	$174.1 billion	0.00%	IT Services
Palantir Technologies (NASDAQ:PLTR)	$374.1 billion	0.00%	Software

Data as of Mar 10, 2026. Showing 5 of 5 tickers.

Loading ticker_table...

Loading paragraph...

NASDAQ: MSFT

Microsoft

Today's Change

(0.11%) $0.45

Current Price

$409.41

Key Data Points

Market Cap

$3.0T

Day's Range

$403.50 - $410.21

52wk Range

$344.79 - $555.45

Volume

30M

Avg Vol

34M

Gross Margin

68.59%

Dividend Yield

0.85%

Loading company_card...

Loading paragraph...

2. Adobe

Loading paragraph...

NASDAQ: ADBE

Adobe

Today's Change

(-0.42%) $-1.18

Current Price

$282.44

Key Data Points

Market Cap

$116B

Day's Range

$277.90 - $285.20

52wk Range

$244.28 - $443.90

Volume

4.7M

Avg Vol

5.2M

Gross Margin

88.60%

Loading company_card...

Best known for creativity software such as Photoshop, Adobe (ADBE -0.42%) sets 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 $21.5 billion in its fiscal year 2024, 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 had 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 11% in fiscal 2024, and earnings per share (EPS) rose 5% as it took a $1 billion acquisition termination charge when its acquisition of the newly public Figma (FIG +4.71%) was blocked.

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

3. Salesforce

Loading paragraph...

NYSE: CRM

Salesforce

Today's Change

(-1.63%) $-3.29

Current Price

$198.81

Key Data Points

Market Cap

$183B

Day's Range

$195.91 - $203.67

52wk Range

$174.57 - $296.05

Volume

571K

Avg Vol

11M

Gross Margin

75.28%

Dividend Yield

0.84%

Loading company_card...

Loading paragraph...

NASDAQ: SHOP

Shopify

Today's Change

(2.54%) $3.30

Current Price

$133.50

Key Data Points

Market Cap

$174B

Day's Range

$127.66 - $134.79

52wk Range

$69.84 - $182.19

Volume

9.3M

Avg Vol

11M

Gross Margin

47.88%

Loading company_card...

Shopify (SHOP +2.65%) 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 26% to $8.9 billion in 2024, and its runway looks promising.

5. Palantir Technologies

Loading paragraph...

NASDAQ: PLTR

Palantir Technologies

Today's Change

(-0.32%) $-0.50

Current Price

$156.66

Key Data Points

Market Cap

$374B

Day's Range

$152.99 - $158.45

52wk Range

$66.12 - $207.52

Volume

1.7M

Avg Vol

49M

Gross Margin

82.37%

Loading company_card...

Palantir (PLTR -0.32%) 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 datasets 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 accelerating to more than 60% in the third quarter of 2025, and profit margins steadily expanding.

Palantir was also the best-performing stock on the S&P 500 in 2024, and through November, it was on track to be one of the top-performing ones in 2025 as well.

Loading paragraph...

Did You Know?

Loading callout...

Loading paragraph...

Don't ignore SaaS company valuations

Microsoft, Adobe, and Salesforce may not be the most exciting SaaS stocks, but they're all profitable and sport valuations that don't require mental gymnastics to justify. Growth in subscription-based software, supercharged by AI, will create plenty of winners in the SaaS industry -- but ignoring valuation could be a recipe for disappointing returns.

Palantir may be the exception that proves the rule, but as a general rule, valuation eventually needs to be justified, no matter how promising the stock is.

Loading paragraph...

FAQ: SaaS stocks

Loading faq...

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 Figma and Shopify. The Motley Fool has positions in and recommends Adobe, Alphabet, Datadog, Figma, Microsoft, Palantir Technologies, Salesforce, 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.