“Get me out” is what Jeffrey Favuzza, an equity trader with Jefferies, says he is hearing from clients in an interview with Bloomberg, as selling pressure intensifies across software stocks in what he has dubbed the “SaaSpocalypse, an apocalypse for software-as-a-service stocks.” He further said, “People are just selling everything and don’t care about the price.”
What sparked this SaaSpocalypse? Anthropic PBC’s release of plugins for Claude Cowork which threaten to disrupt the software industry as a whole. Toni Kaplan, an analyst at Morgan Stanley, had this to say regarding Anthropic’s release:
”Anthropic launched new capabilities for its Cowork to the legal space, heightening competition. We view this as a sign of intensifying competition, and thus a potential negative.”
Other analysts had similar takes. Thomas Shipp, LPL Financial’s head of equity research, speaking to investors, said:
”The fear with AI is that there’s more competition, more pricing pressure, and that their competitive moats have gotten shallower, meaning they could be easier to replace with AI.”
Billy Fitzsimmons, Piper Sandler analyst, wrote:
”Our concern is that the seat-compression and vibe coding narratives could set a ceiling on multiples.”
As a result, $285 billion in market capitalization was wiped out across the software, financial services, and asset management sectors in a single day, despite 67% of software companies in the S&P beating revenue expectations in the recent quarter, according to Bloomberg data.
Given investor sentiment-driven wipeouts across the software industry, which have spilled over to the broader market, many stocks are trading near their 52-week lows. A good portion of these stocks are trading at those beaten-down levels, despite good fundamentals and growth prospects over the next year. We will now take a look at 11 of the best beaten-down growth stocks to buy now.
Our Methodology
We shortlisted U.S.-listed stocks with at least $2 billion in market capitalization and at least three analysts covering the stocks. From this universe, we narrowed to stocks trading within 10% of their 52-week lows, with a normalized EPS growth forecast of at least 10% over the next year and at least 25% median projected upside from analysts. We then filtered the list to only contain stocks with at least 15 hedge fund holders, according to Insider Monkey’s proprietary hedge fund database, which tracks 978 hedge funds as of Q3 2025. Finally, we selected the 11 stocks with the highest projected upsides. We have taken the data from Yahoo Finance and CNN.com.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: All data presented are as of 8 February 2026.
11. Snap Inc. (NYSE:SNAP)
Share Price: $5.22
52-Week Low: $5.17
Upside: 53.26%
Next Year’s EPS Growth: 20.59%
Number of Hedge Fund Holders: 50
Snap Inc. (NYSE:SNAP) is one of the 11 Best Beaten Down Growth Stocks to Buy Now.
On February 6, Stifel upgraded its rating on Snap to a “Hold” from “Sell”. Despite the rating upgrade, the firm did not change its target price of $5.50 on the shares. In a research note to investors, the firm said that Snap’s risk/reward profile is now more reasonable at current share prices. They also believe that the bad news, namely declining North America user base, timid advertising growth, and unclear specifics on the company’s agreement with Perplexity, have already been priced in.
This rating change comes on the heels of Snap’s Q4-2025 results, which were released on February 4. The report showed that average daily active users (DAU) dropped 0.6% QoQ globally (from 477 million to 474 million). The decline was even more significant in North America, where DAU fell 4.1% QoQ (from 98 million to 94 million).
Snap’s advertising revenue in the 4th quarter, meanwhile, grew 5% YoY to $1.48 billion (from $1.41 billion). This segment was a drag on overall revenue growth, which grew 10% YoY to $1.72 billion (from $1.56 billion).
Finally, Snap noted that the revenue uplift from the Perplexity deal, announced last November 2025, will likely be delayed because the two sides have yet to finalize a broader rollout plan. For reference, this is what was initially said about the agreement:
”Under the agreement, Perplexity will pay Snap $400 million over one year, through a combination of cash and equity, as we achieve global rollout. Revenue from the partnership is expected to begin contributing in 2026.”
Stifel believes that Snap’s stock price, which has fallen 37% year-to-date, already reflects these setbacks. Other firms covering Snap appear to share this sentiment, as the implied upside (based on the median analyst target price of $8.00, per CNN) remains high at 53.26%, despite a series of recent target price cuts.
Snap Inc. (NYSE:SNAP) is a technology company operating in North America, Europe, and internationally. The company offers Snapchat, a visual messaging application with various tabs including Camera, visual messaging, Snap Map, Stories, and Spotlight.
10. Vertex Inc. (NASDAQ:VERX)
Share Price: $15.73
52-Week Low: $14.78
Upside: 62.11%
Next Year’s EPS Growth: 18.54%
Number of Hedge Fund Holders: 22
Vertex Inc. (NASDAQ:VERX) is one of the 11 Best Beaten Down Growth Stocks to Buy Now.
Piper Sandler, on February 3, downgraded its call on Vertex to Neutral from Overweight as a new analyst assumed coverage of the stock. The firm also cut its target price by 37.5% to $20 (from $32). Concerns about seat compression due to the impact of artificial intelligence, specifically vibe coding, were key reasons for the rating downgrade and target price cut. Piper Sandler emphasized that its decision does not reflect the firm’s conviction regarding Vertex’s upcoming Q4 earnings, which are scheduled to be released on February 11.
For context, on January 30, Anthropic launched plugins for Claude Cowork, which would “tailor Claude to specific job functions like sales, legal, and financial analysis.” As part of the launch, Anthropic released 11 open-source plugins (Productivity, Enterprise Search, Plugin Create, Sales, Finance, Data, Legal, Marketing, Customer Support, Product Management, and Biology Research) for all paid users.
This release erased $285 billion in market capitalization for software, financial services, and asset management stocks, according to Bloomberg. Thomas Shipp, LPL Financial’s head of equity research, speaking to investors, said:
”Why do I need to pay for software, the thinking goes, if internal development of these systems now takes developers less time with AI?”
Vertex’s stock price fell 20.3% to $14.78 (from $18.55) because of this news, before rebounding slightly to $15.73. Despite the sell-off as well as the recent downgrade from Piper Sandler, most analysts are still convinced that Vertex is a good investment. The median target price, according to CNN, is $25.50, which implies an upside of 62.11%.
Vertex Inc. (NASDAQ:VERX) is a provider of tax compliance software solutions for enterprises and mid-market companies. The company is located in King of Prussia, Pennsylvania, and was established in 1978 by Ray and Antoinette Westphal.
