Which software stocks are best positioned for an AI-dominated world?
Seeking Alpha analysts Brett Ashcroft Green, Louis Gerard, and Kennedy Njagi weigh in.
Brett Ashcroft Green: If I’m looking at the SaaS sell-off, Microsoft (MSFT) and Adobe (ADBE) stand out as strong names to consider.
With Microsoft (MSFT), the large drawdown is rare for the largest enterprise software company. To me, any business that has a cloud computing business is already hedged against AI eating their enterprise software business.
Cloud should grow as more and more bot army code bots like Clawdbot and Moltbot get deployed by coders and amateurs. The code most likely gets put into repositories of GitHub, which Microsoft owns, and the bots work on cloud platforms.
From what I’ve seen, those who are employing fully autonomous agents are opting to put them in a cheap, isolated space like a Mac mini or a Chromebook, both with little hard drive storage. The cloud will be crucial here, and coders seem to want to maintain their more valuable work computers separately.
Adobe (ADBE), meanwhile, is a mainstay in many enterprises. They deal with graphic design, editing, and legal work with Acrobat. This, to me, seems like a SaaS company with a lot of sensitive data that enterprises would think twice about trying to both replace and store themselves.
The numbers keep improving for Adobe while the price declines. I wouldn’t say it’s a Google-level value like Google (GOOG) (GOOGL) was in 2024-25, but it does share that unique quality of falling while fundamentals climb.
Louis Gerard: I have two great picks for which software stock is best positioned: Microsoft (MSFT) and ServiceNow (NOW), which have evolved into a symbiotic AI power couple for enterprise software.
Microsoft remains the undisputed infrastructure leader, leveraging Azure’s massive scale and Microsoft 365 Copilot to monetize AI at the individual user level. ServiceNow, meanwhile, has carved out a dominant position as the orchestration layer, using its AI control tower and Agentic AI to automate complex back-office workflows that span across multiple software platforms.
Because NOW runs its AI platform on Azure and integrates directly with Teams, the two companies essentially capture the entire value chain.
Kennedy Njagi: I think the safest survivors are the companies selling the plumbing that AI software depends on. And in that sense, I believe Micron Technology (MU) is well positioned because AI growth increases memory intensity, and that demand doesn’t get displaced by AI.
Credo (CRDO) and Astera Labs (ALAB) are also good candidates. This is because the AI revolution becomes a connectivity and data movement problem at scale, and these companies supply the critical interconnect and system building blocks.
AI can compress some SaaS categories by reducing seat counts, but it can’t remove the need to move more data, faster, across denser clusters. This is why I view MU, CRDO, and ALAB as companies that should survive the AI revolution. Of course, cyclicality, AI spend, and execution are still risks, but the direction of travel is clear as data center capex follows AI workloads.