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 March 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 a degree of 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 Jun 17, 2026 at 1:02 AM EST | Fact-checked by Frank Bass

Key Points

SaaS stocks offer regular revenue due to their subscription model, appealing to investors.
Despite high valuations, some SaaS companies like Microsoft and Adobe remain solid investments.
Investors should consider AI's impact on valuations and seek reasonably priced SaaS stocks.

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	Ticker	Dividend yield	Industry
Microsoft (NASDAQ:MSFT)	$2.8 trillion	0.95%	Software
Adobe (NASDAQ:ADBE)	$78.5 billion	0.00%	Software
Salesforce (NYSE:CRM)	$125.7 billion	1.12%	Software
Shopify (NASDAQ:SHOP)	$139.7 billion	0.00%	IT Services
Palantir Technologies (NASDAQ:PLTR)	$279.8 billion	0.00%	Software
ServiceNow (NYSE:NOW)	$98.9 billion	0.00%	Software
CrowdStrike (NASDAQ:CRWD)	$173.3 billion	0.00%	Software

Data as of Jun 24, 2026. Showing 7 of 7 total entries.

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1. Microsoft

NASDAQ: MSFT

Microsoft

Today's Change

(-2.37%) $-8.87

Current Price

$365.07

Key Data Points

Market Cap

$2.8T

Day's Range

$364.78 - $378.88

52wk Range

$356.28 - $555.45

Volume

1.3M

Avg Vol

36.2M

Gross Margin

68.31%

Dividend Yield

0.95%

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For 45 years, Microsoft (MSFT -2.37%) has dominated the market for traditional software. Microsoft Windows is the standard operating system for PCs, and Microsoft Office remains the productivity suite of choice for enterprises around the world.

However, Microsoft's dominance was tested by the proliferation of mobile devices that do not use Windows, as well as competition from Alphabet's (GOOG -0.36%) (GOOGL -0.33%) Google products, including Google Workspace, Docs, Sheets, and Slides.

Microsoft eventually abandoned its PC-centric strategy, bringing first-rate versions of its Office applications to Apple products and mobile devices, and launching Office 365, now Microsoft 365, a subscription-based version of Office. With Microsoft 365 garnering at least 89 million consumer subscribers and more than 400 million paid commercial seats, Microsoft has preserved its lead in the productivity software market.

Another SaaS product from Microsoft is Teams, the company's collaboration software and competitor to Slack, which quickly gained subscribers during the pandemic. Teams aims to be a one-stop shop for collaboration, offering group chats, video meetings, and related features.

Microsoft isn't a pure-play SaaS company, and its stock has historically been expensive relative to earnings. But the company has successfully transitioned to selling subscription-based software and grown its SaaS business by double digits while maintaining its market dominance. Both revenue and earnings have been growing swiftly, driven by its success in SaaS and the emergence of artificial intelligence (AI).

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2. Adobe

NASDAQ: ADBE

Adobe

Today's Change

(-0.41%) $-0.81

Current Price

$196.62

Key Data Points

Market Cap

$78B

Day's Range

$195.10 - $202.34

52wk Range

$190.12 - $392.58

Volume

198.9K

Avg Vol

6.1M

Gross Margin

88.82%

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Best known for its creativity software, such as Photoshop, Adobe (ADBE -0.41%) 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 similar top-line growth next year, and Adobe looks well-positioned for long-term growth, despite any potential competition.

3. Salesforce

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NYSE: CRM

Salesforce

Today's Change

(-0.67%) $-1.02

Current Price

$152.40

Key Data Points

Market Cap

$126B

Day's Range

$150.62 - $157.06

52wk Range

$146.32 - $276.80

Volume

478.3K

Avg Vol

15.1M

Gross Margin

75.12%

Dividend Yield

1.12%

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Salesforce (CRM -0.67%), 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%. 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

Today's Change

(6.08%) $6.55

Current Price

$114.23

Key Data Points

Market Cap

$140B

Day's Range

$106.61 - $114.49

52wk Range

$94.00 - $182.19

Volume

700K

Avg Vol

10.1M

Gross Margin

47.80%

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Shopify (SHOP +6.03%) 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 continues to look promising.

5. Palantir Technologies

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NASDAQ: PLTR

Palantir Technologies

Today's Change

(-2.79%) $-3.25

Current Price

$113.45

Key Data Points

Market Cap

$280B

Day's Range

$112.25 - $118.00

52wk Range

$112.25 - $207.52

Volume

1.4M

Avg Vol

44.4M

Gross Margin

84.07%

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Palantir (PLTR -2.79%) 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 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.

6. ServiceNow

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NYSE: NOW

ServiceNow

Today's Change

(-2.31%) $-2.22

Current Price

$93.72

Key Data Points

Market Cap

$99B

Day's Range

$93.43 - $96.98

52wk Range

$81.24 - $211.48

Volume

423K

Avg Vol

28.7M

Gross Margin

76.56%

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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 20.5%-21% revenue growth to around $15.7 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

Today's Change

(-1.23%) $-8.37

Current Price

$672.55

Key Data Points

Market Cap

$173B

Day's Range

$669.19 - $687.52

52wk Range

$342.72 - $785.66

Volume

54.8K

Avg Vol

3.4M

Gross Margin

74.89%

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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 like 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 the company is still unprofitable on a GAAP basis.

Looking ahead to fiscal 2027, the company expects $5.91-$5.96 billion in revenue, or 24% 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 falling sharply in bear markets.
It's a highly competitive industry, and competitive advantages may not be as strong as they seem.
Profits are often inflated for adjustments for things like share-based compensation.

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Did You Know?

Fast-growing SaaS companies often post large losses as they scale up their revenue.

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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 expand to previous records. 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

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

Top 8 Artificial Intelligence Start-Ups to Watch in 2026

Best Cloud Computing Stocks for 2026 and How to Invest

Best Semiconductor Stocks for 2026 and How to Invest

Best Advertising Technology Stocks for 2026 and How to Invest

FAQ

FAQ: SaaS stocks

Are SaaS stocks good long-term investments?

Are SaaS stocks good long-term investments?

Do SaaS companies pay dividends?

Do SaaS companies pay dividends?

What are the tax implications of investing in SaaS stocks?

What are the tax implications of investing in SaaS stocks?

What is the biggest SaaS company?

What is the biggest SaaS company?

Is there a SaaS ETF?

Is there a SaaS ETF?

Are SaaS stocks affected by economic downturns?

Are SaaS stocks affected by economic downturns?

How can I diversify my SaaS stock investments?

How can I diversify my SaaS stock investments?

About the Author

Read Next

Stocks Mentioned

Motley Fool Stock Advisor’s Latest Pick

Premium Investing Services

Best SaaS stocks in 2026

Key Data Points

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?

Top 8 Artificial Intelligence Start-Ups to Watch in 2026

Best Cloud Computing Stocks for 2026 and How to Invest

Best Semiconductor Stocks for 2026 and How to Invest

Best Advertising Technology Stocks for 2026 and How to Invest

FAQ: SaaS stocks

Are SaaS stocks good long-term investments?

Are SaaS stocks good long-term investments?

Do SaaS companies pay dividends?

Do SaaS companies pay dividends?

What are the tax implications of investing in SaaS stocks?

What are the tax implications of investing in SaaS stocks?

What is the biggest SaaS company?

What is the biggest SaaS company?

Is there a SaaS ETF?

Is there a SaaS ETF?

Are SaaS stocks affected by economic downturns?

Are SaaS stocks affected by economic downturns?

How can I diversify my SaaS stock investments?