The software-as-a-service (SaaS) sector has been a cornerstone of the cloud computing revolution for over a decade. However, after years of aggressive growth and premium valuations, many SaaS stocks have seen a pullback amid rising interest rates, shifting enterprise budgets, and broader market volatility. As a result, several high-quality SaaS companies are now trading well below their previous highs, prompting renewed interest from investors looking for value in the tech space.
At the same time, there’s growing debate about the future of the SaaS model itself. In a recent statement, Microsoft CEO Satya Nadella declared that “SaaS as we know it is dead,” suggesting a transition toward AI agents that operate across systems rather than within siloed applications. He emphasized that many SaaS offerings today are essentially “CRUD apps with business logic,” and predicted the emergence of a new AI layer that could render traditional SaaS models less relevant over time.
While this shift is still unfolding, it raises important questions about how current SaaS companies will adapt, or be disrupted. In this context, the following list highlights ten SaaS stocks trading at a discount, offering a closer look at firms that may still have room to grow despite market headwinds and an evolving technological landscape.
A close-up of a server running a cloud-native platform, symbolizing the power of the software-as-a-service (SaaS) business area.
Our Methodology
To identify high-quality SaaS stocks, we sifted through stocks owned by SaaS ETFs. From the SaaS universe, we focused on firms with recurring revenue models, positive free cash flow, and robust growth trajectories. These companies span key SaaS verticals including identity management, cloud infrastructure, developer enablement, cybersecurity, and enterprise automation, sectors well-positioned to benefit from continued digital transformation and AI-led innovation. We narrowed the list by requiring each stock to offer at least 15% upside based on consensus 12-month analyst price targets. We have also added hedge fund sentiment for each stock as of Q1 2025.
Note: All data was recorded on July 21, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best SaaS Stocks Trading at a Discount
10. ServiceNow, Inc. (NYSE:NOW)
Average analyst upside: 15.11%
Number of Hedge Fund Holders: 106
ServiceNow, Inc. (NYSE:NOW) is one of the best SaaS stocks to buy according to analysts. Barclays analyst Raimo Lenschow has lifted the firm’s price target on ServiceNow, Inc. (NYSE:NOW) to $1,200 from $1,085, maintaining an Overweight rating ahead of the company’s upcoming second-quarter results. The revised target reflects improving sentiment around enterprise software demand and growing optimism tied to recent field checks.
In a note to clients, Lenschow noted that while April began on a cautious note, the tone improved notably in May and June, particularly for firms with fiscal calendars aligned to the typical reporting cycle. ServiceNow, with its broad footprint across IT operations and digital workflows, is seen as well-positioned to benefit from this recovery in demand as Q2 earnings near.
The company has consistently executed on product expansion, particularly in AI-driven automation and workflow orchestration, which continues to attract interest from large enterprise clients. That momentum could support not just a solid quarterly report but also the potential for management to revise guidance upward, according to Barclays.
Shares of ServiceNow have outperformed many software peers in 2024, helped by consistent results and a clear roadmap tied to enterprise digitization. The price target hike suggests Barclays sees further room to run, especially if macro conditions remain stable and enterprise IT budgets continue trending upward in the second half of the year.
9. MongoDB, Inc. (NASDAQ:MDB)
Average analyst upside: 22.11%
Number of Hedge Fund Holders: 72
MongoDB, Inc. (NASDAQ:MDB) is one of the best SaaS stocks to buy according to analysts. Stephens has initiated coverage of MongoDB, Inc. (NASDAQ:MDB) with an Equal Weight rating and a price target of $247, reflecting a balanced view on the company’s near-term prospects. While acknowledging MongoDB’s strengths, particularly its flagship cloud offering, Atlas, the firm expressed caution around intensifying competition within the database software space.
In its note to investors, Stephens described Atlas as a “rare, high-quality asset,” underscoring its strategic value within MongoDB’s broader product ecosystem. Atlas has become a central growth driver for the company, benefiting from the ongoing shift to cloud-native applications and demand for flexible data solutions. However, the firm also pointed out that MongoDB is no longer the only game in town.
A growing number of competitors, including major cloud providers, are adding or enhancing document database features, long considered MongoDB’s key differentiator. That trend, according to Stephens, could gradually erode the company’s competitive edge, particularly as enterprises seek integrated solutions from vendors they already use.
Despite these concerns, the Equal Weight rating suggests that MongoDB’s current valuation largely reflects both its potential and the emerging risks. Investors may continue to see Atlas as a strong asset, but Stephens is signaling that the market landscape is shifting, and MongoDB will need to continue innovating to defend its position.
