11 Best TaaS Stocks to Buy Now

Published December 21, 2022 at 9:24 am EST Updated August 31, 2026 at 11:59 am EDT

In this article, we discuss the 11 best tech-as-a-service (TaaS) stocks to buy now.

The International Monetary Fund (IMF) predicts that global growth will slow to 2.7% next year, the weakest pace seen since 2001. In a recent report, the world body forecast that the global GDP growth is expected to remain at about 3.2% in 2022, down from 6% in 2021. The US GDP growth is projected to be only 1% during this time, even as the benchmark indexes in the country register impressive gains on the back of easing fears around aggressive rate hikes at the end of the fiscal year.

The slowing economy would suggest that investors stay away from technology stocks that are traditionally seen as operating in the growth sector. However, shrewd investors now seem to understand that technology has permeated each aspect of human life and there are several prominent tech names, like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Meta Platforms, Inc. (NASDAQ:FB), that offer technology-as-a-service products immune from recessionary environments.

As the US economy tackles extremely high inflation and a very tight labor market, tech stocks have also had to contend with several significant interest rate increases that have taken the federal funds rate up from 0% to 3.75%-4% currently, with another 0.5% rate hike expected to come in December. Despite these pressures, big tech continues to dominate the S&P 500 and the NASDAQ Composite. Investors also seem unwilling to look beyond these popular tech names for growth strategies.

Technology-as-a-Service (TaaS)

Technology-as-a-Service (TaaS) is powered by tech products and provided as services. Unlike the traditional generation of labor-based services, the services of TaaS companies are highly software-enabled, customizable to business contexts, and often virtually delivered by a system of hardware, software and people. Technology-as-a-Service is the rising future for technology sectors. This model has already been showcased in the computing industry. Nowadays, most successful companies in this industry are no longer hardware giants but those that also provide software services.

In 2022, more and more businesses are taking advantage of advances in technology. Improvements like near-ubiquitous high-speed broadband, cheap data storage, simple payment solutions, micro-services, and growing acceptance among both consumers and C-level leaders of subscription model services, have been made at a rapid pace. Altogether, these developments create a technology eco-system where software, platforms and services have moved out of the office and changed into server centers in the cloud.

Photo by Joshua Mayo on Unsplash

Our Methodology

The companies that offer tech-related services were selected for the list. Special importance was assigned to outlining the basic business fundamentals and analyst ratings for each firm to provide readers with some context so they can make more informed investment choices. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

Best TaaS Stocks to Buy Now

11. DocuSign, Inc. (NASDAQ:DOCU)

Number of Hedge Fund Holders: 38

DocuSign, Inc. (NASDAQ:DOCU) provides electronic signature software in the United States and internationally. On December 8, DocuSign posted earnings for the third quarter of 2022, reporting earnings per share of $0.57, beating market estimates by $0.15. The revenue over the period was $645.5 million, up 18.3% compared to the revenue over the same period last year and beating market estimates by $18.27 million.

On December 9, BofA analyst Brad Sills maintained a Neutral rating on DocuSign, Inc. stock and lowered the price target to $65 from $80, noting that healthy billings upside from early traction with new go-to-market initiatives was reported by the firm.

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm Fisher Asset Management is a leading shareholder in DocuSign, Inc. with 5.5 million shares worth more than $294.6 million.

Just like Amazon.com, Inc., Microsoft Corporation, and Meta Platforms, Inc., DocuSign, Inc. is one of the best TaaS stocks to buy now according to elite investors.

In its Q3 2022 investor letter, Rowan Capital Street, an asset management firm, highlighted a few stocks and DocuSign, Inc. was one of them. Here is what the fund said:

“In the case of DocuSign, Inc., the “Management” part no longer satisfies our requirements to remain in our investment portfolio. In the past 6-9 months, the company has had a huge turnover in both employees and upper management. In June of 2021, the board decided to get rid of Dan Springer, who had been the CEO of DocuSign since 2017 and took the company public in 2018. We found this decision strange as we thought that he did a great job growing the company over the past 5 years (revenues grew almost 5x from $519 million in 2017 to an estimated $2.4 billion this year).

Dan was faced with a very difficult, unprecedented operating environment just like all the CEOs of SaaS companies. From Q2 ‘20 until Q3 ‘21, during pandemic shutdowns, growth exploded from about 30% to 60%+, as there was a ton of pull-forward demand. The business doubled in about 6 or 7 quarters! As the world opened up after the pandemic, growth slowed quite a bit, especially in comparison to these abnormal pandemic quarters. However, on a 3-year CAGR basis, growth was still very healthy (sales grew from $974 million in 2019 to $2.5 billion expected in 2022). They also had to dramatically increase their sales force (the biggest expense) to keep up with all this unexpected growth. New employees did not have a chance to be trained properly, but it still worked well as they had demand easily coming to them. Now that there is a very different demand environment, a lot of this salesforce either need to be retrained for normal sales cycles (land and expand) or be replaced. Employee turnover also compounded with a lot of people who were with a company when the stock was going up and up, and now that the stock is down so much from the highs, their stock options are no longer valuable. Having said this, we are not sure any other CEO could have done a better job managing through such a difficult operating environment…read more

10. Zoom Video Communications, Inc. (NASDAQ:ZM)

Number of Hedge Fund Holders: 40

Zoom Video Communications, Inc. (NASDAQ:ZM) provides a unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. On November 7, AMC Theaters, an American movie theater chain, announced that it has made a partnership with Zoom Video to turn some AMC locations throughout the US into Zoom meeting rooms. Zoom Rooms at AMC will be available in up to 17 major US markets in 2023.

On November 22, Benchmark analyst Matthew Harrigan kept a Buy rating on Zoom Video Communications, Inc. stock and lowered the price target to $102 from $118, noting that the company showed below-consensus fiscal fourth-quarter sales guidance and management’s intimations for F2024 growth were modest.

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Zoom Video Communications, Inc. with 10.9 million shares worth more than $801.5 million.

In its Q1 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Zoom Video Communications, Inc. was one of them. Here is what the fund said:

“What about the other asset class that has attracted the most attention from the investment community in recent times? Here we can distinguish three major groups. First, those companies without earnings that had convinced investors of their great future growth prospects, pushing up their valuations to irrational levels. A clear example of this, which we mentioned almost two years ago is Zoom Video Communications, Inc. (“Zoom”), whose market cap exceeded that of companies such as IBM or came close to that of Cisco Systems. Well, from the time we wrote about this odd situation until today, Zoom shares have collapsed by nearly 80%.

Therefore, if interest rates rise (or are expected to rise), company valuations are negatively impacted. This is especially true for those businesses that generate little cash today and the market expects them to generate a lot of cash in the future. Hence the severe losses in companies that promised a lot of cash generation in the future (such as Zoom).”

9. Cloudflare, Inc. (NYSE:NET)

Number of Hedge Fund Holders: 53

Cloudflare, Inc. (NYSE:NET) operates as a cloud services provider that delivers a range of services to businesses worldwide. On December 13, Cloudflare announced a Project Safekeeping program to provide zero trust security solutions free of charge to medium-sized and small critical infrastructure organizations. The company said that this program is designed to protect under-resourced critical infrastructure organizations against cyberattacks and data breaches.

On November 4, RBC Capital analyst Matthew Hedberg maintained an Outperform rating on Cloudflare, Inc. stock and lowered the price target to $60 from $74, noting that the company continues to navigate the macro environment and looks more resilient than most.

At the end of the third quarter of 2022, 53 hedge funds in the database of Insider Monkey held stakes worth $629 million in Cloudflare, Inc., compared to 41 in the preceding quarter worth $541 million.

In its Q3 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Cloudflare, Inc. was one of them. Here is what the fund said:

“We continued to build our position in Cloudflare, Inc. during the quarter as the shares declined with the overall software space and the long-term risk/ reward balance became more compelling. The company reported a strong second quarter, with revenue growth accelerating to 54%, as well as better gross and operating margins. Third-quarter guidance was also ahead of Wall Street expectations. Given Cloudflare’s proprietary network and massive global scale, its software products have a disruptive price-performance advantage over competitors. As the company introduces new products as well as disruptive packaging/pricing, its unit-level economics should continue to improve over time, with the company already well ahead of its long-term gross margin target of 74%, reporting 78.9% for the second quarter. This drives strong cross/upselling activity with customers, reflected in strong net-dollar expansion rates of more than 125%. Indeed, in the most recent quarters, customers purchasing five or more products reached 81% of the base, six or more products reached 70% of the base, and seven or more products reached 58% of the base. Enterprise penetration continues to be a key long-term driver, with 1,749 customers now spending over $100,000 annually with the company, growing 61% and now accounting for over 60% of total revenue. With approximately 152,000 paying customers at the end of last quarter, large enterprise customers still represent just 1% of total paid customers and thus a material growth opportunity in the coming years. We continue to have high confidence in the company’s ability to innovate at a rapid pace (announced 20 new products or enhancements in September alone), package and bundle with disruptive pricing, and take material share in its large and growing addressable markets.”

8. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 62

Shopify Inc. (NYSE:SHOP) is a commerce company that provides a commerce platform and services worldwide. On November 29, Shopify Inc announced record-setting sales for Black Friday Cyber Monday weekend with a sales tally of $7.5 billion from independent businesses worldwide. The sales were up 19% from the sales generated during Shopify’s Black Friday Cyber Monday weekend in 2021.

On December 9, SMBC Nikko analyst Andrew Bauch maintained an Outperform rating on Shopify Inc. stock and raised the price target to $45 from $40, noting that the company is one of the few names with the potential to accelerate sales growth and expand margins simultaneously in 2023.

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Shopify Inc. with 14.5 million shares worth more than $391.5 million.

In its Q3 2022 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Shopify Inc. was one of them. Here is what the fund said:

“Shopify Inc. is a leading e-commerce platform supporting over 2 million merchants with software, online storefronts and payments technology. Like Uber, Shopify returned to the mid-cap territory during Q2 as the company’s profit cycle and share price faced significant pressure. Earlier this year, the company began a phase of investments to support a range of future growth drivers, including Shopify Plus for larger brands, logistics services, international expansion, point-of-sale payments and social media-based commerce. With high inflation putting pressure on consumer spending, and with e-commerce activity normalizing after a massive pandemic spike, Shopify’s earnings have fallen sharply. While we have outstanding questions about the likelihood of success for the company’s capital-intensive logistics investments, we decided to take advantage of the stock’s >75% YTD decline and initiate a GardenSM position at a deep discount to our PMV estimate. Our thesis is predicated on our belief there is still a long runway for commerce to move online, and Shopify is well-positioned to win a share of this market. The company has created an ecosystem of products (payment processing, financing, shipping, customer engagement tools, etc.), partners (TikTok, Google, Meta), sales channels and over 6,000 apps to help its merchants sell online and establish direct relationships with customers.”

7. Datadog, Inc. (NASDAQ:DDOG)

Number of Hedge Fund Holders: 74

Datadog, Inc. (NASDAQ:DDOG) provides a monitoring and analytics platform for developers, information technology operations teams, and business users in the cloud in North America and internationally. On November 3, Datadog revealed that it acquired Cloudcraft, a visualization service to create real-time diagrams of cloud infrastructures. The company plans to continue offering Cloudcraft to existing and new customers. It will also enhance its capabilities by integrating with the Datadog platform.

On December 14, Oppenheimer analyst Ittai Kidron upgraded Datadog, Inc. to Outperform from Perform with a $105 price target.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Datadog, Inc. with 5.8 million shares worth more than $512.7 million.

In its Q3 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Datadog, Inc. was one of them. Here is what the fund said:

“Similarly, we continued scaling up our investment in Datadog, Inc., recognizing significant opportunities for the long term, while the majority of investors remain preoccupied with the here and now. While the company may see some short-term headwinds to growth (the company reported seeing some impact to its volume-driven logs and Application Performance Management modules), long-term prospects remain bright, in our view. Datadog reported a best-in-class gross retention rate in the “mid-to-high 90s%,” 74% year-over-year revenue growth, and 21% adjusted operating margins.”

6. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 75

Block, Inc. (NYSE:SQ) creates tools that enable sellers to accept card payments and provide reporting and analytics and next-day settlement. On November 16, Block revealed that its Square payment systems for business will launch a new credit in collaboration with American Express. This credit card would be specifically launched for small businesses which use the company’s payment system.

On December 12, Mizuho analyst Dan Dolev maintained a Neutral rating on Block, Inc. stock and raised the price target to $70 from $69, noting the 2023 outlook for sub-sectors in the group against a backdrop of higher rates, high inflation, and a slowing macro.

Among the hedge funds being tracked by Insider Monkey, St. Petersburg, Florida-based investment firm ARK Investment Management is a leading shareholder in Block, Inc. with 9.2 million shares worth more than $505.5 million.

In addition to Amazon.com, Inc., Microsoft Corporation, and Meta Platforms, Inc., Block, Inc. is one of the best TaaS stocks to buy now according to elite investors.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Block, Inc. was one of them. Here is what the fund said:

“Block, Inc. provides point-of-sale technology to small businesses and operates the Cash App ecosystem of financial services for individuals. Shares fell due to mixed quarterly results with more modest growth in the Seller business offsetting strength in Cash App. While the integration of recently acquired Afterpay is progressing well and credit metrics remain healthy, the buy-now-pay-later business slowed due to greater competitive intensity. We continue to own the stock due to Block’s long runway for growth, sustainable competitive advantages, and unique corporate culture.”

5. Adobe Inc. (NASDAQ:ADBE)

Number of Hedge Fund Holders: 93

Adobe Inc. (NASDAQ:ADBE) operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. On November 17, Adobe’s planned acquisition of Figma, a collaborative web application for interface design, for $20 billion was moved to an in-depth review by the Department of Justice. The parties received a DoJ second request on November 14.

On December 12, UBS analyst Karl Keirstead maintained a Neutral rating on Adobe Inc. stock and raised the price target to $350 from $320, noting that stability rather than material deceleration is suggested in the quarter despite the apparent macro demand pressure.

Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Adobe Inc. with 5.1 million shares worth more than $1.4 billion.

In its Q3 2022 investor letter, L1 Capital International, an asset management firm, highlighted a few stocks and Adobe Inc. was one of them. Here is what the fund said:

“Late in the quarter, one of our smallest positions, Adobe Inc., reported quarterly results and gave guidance which was modestly below our expectations. The share price fell substantially, not because of current financial performance and outlook, but principally because of the announced acquisition of Figma for $20b in cash and shares, plus additional retention payments to Figma employees. Figma, founded in 2012, has pioneered the development of software for collaborative product design on the web. The acquisition is a mix of offence and defence by Adobe management. Strategically the acquisition makes a lot of sense, with Figma complementary to Adobe’s suite of software and it is the clear leader in a fast-growing market. We also believe Adobe was acting defensively, fearing Figma could develop into a strong direct competitor over time. The acquisition price was extremely high, with annual recurring revenue estimated to be $400m by the end of 2022.”

4. Salesforce, Inc. (NYSE:CRM)

Number of Hedge Fund Holders: 117

Salesforce, Inc. (NYSE:CRM) provides customer relationship management technology that brings companies and customers together worldwide. On November 7, according to a survey undertaken by the firm itself, companies across industries and regions were seeing, on average, an estimated 25% savings on IT costs and a 26% increase in employee productivity using Salesforce products.

On December 5, Credit Suisse analyst Phil Winslow maintained an Outperform rating on Salesforce.com, inc. (NYSE:CRM) stock and lowered the price target to $225 from $250, noting that the company reported solid third-quarter results on the income statement, while CRPO growth of 12% year-over-year was consistent with guidance and consensus of 12%.

At the end of the third quarter of 2022, 117 hedge funds in the database of Insider Monkey held stakes worth $8.2 billion in Salesforce, Inc., compared to 116 in the preceding quarter worth $7.9 billion.

In its Q3 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Salesforce, Inc. was one of them. Here is what the fund said:

“Salesforce, Inc. has become a dominant global player in sales, customer service, commerce and marketing software over the past 20 years. The company earns 80% gross margins and grows 20% organically. Plus, virtually all of its revenue is recurring. We see Salesforce as a great business that we’ve admired from afar for a long time. More recently, the organization has made some changes at the top that prompted us to take a closer look at the stock. New CEO Bret Taylor and CFO Amy Weaver are bringing a culture of financial discipline. We believe this renewed focus on profitability and capital return, combined with Salesforce’s strong underlying business characteristics, will yield strong results. The current valuation of 3.9x next year’s revenues represents a significant discount compared to publicly traded peers and recent private market values in the software space that have similar growth profiles. We view this discount as an opportunity to invest in a great business at a good value.”

3. Alphabet Inc. (NASDAQ:GOOG)

Number of Hedge Fund Holders: 156

Alphabet Inc. (NASDAQ:GOOG) provides various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. The company owns YouTube, one of the biggest video sharing platforms in the world. It also owns Google, the biggest search engine in the worlds. The firm was one of the first tech giants to monetize connections to leading websites across the globe. In the third quarter of 2022, despite macro fears, the firm posted a 6% year-over-year rise in revenue. The firm is also testing new Cloud and video features to keep ahead of the competition in these sectors.

On November 30, Generale analyst Christophe Cherblanc maintained a Buy rating on Alphabet Inc. stock and lowered the price target to $132 from $147, noting that the issue is less about short-term cyclical pressures for the company than delivering the scale benefits expected from a company with revenues of $280 billion in a progressively maturing online ecosystem.

At the end of the third quarter of 2022, 156 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Alphabet Inc., compared to 153 in the preceding quarter worth $22.3 billion.

In its Q3 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Alphabet Inc. was one of them. Here is what the fund said:

“In early January this year – which admittedly feels like eons ago – US President Joe Biden was pushing Americans to take up the government’s offer of free COVID tests to help tackle the surging omicron variant. How did Biden respond when citizens asked about the availability of these tests?

“Google it!”

This advice, undoubtedly well-meant, was roundly scoffed at by the press, however. It seemed too obvious to be very helpful.

Anyway, the anecdote serves to introduce you to one of our largest holdings, Alphabet; the parent company of Google. Note that first, Alphabet’s original and core product – its search engine – has entered our common vocabulary as a verb. ‘Googling’ something has the same meaning as ‘researching’ or ‘finding an answer to something. Second, the reason Biden’s advice was met with such opprobrium was that Googling something has become almost second nature to us now.

These two observations reveal a lot about Google’s strength in the search engine market, in which it has a share of over 90 percent. Because internet search is almost the prototypical network, Google has benefitted from – and we think is also protected by – the huge competitive advantage its scale brings – both to those asking the questions and those providing the answers. The Google search platform becomes increasingly useful to anyone seeking the information as a greater volume of stuff becomes available. This starts a virtuous cycle that results in a colossal market share for Google itself. In the language of business strategists, Google benefits from vast network effects.

Because Google’s search results are viewed by billions of eyeballs every day, its search page ‘real estate is understandably very valuable to those with goods and services to sell. Advertising revenues from this ‘real estate as well as that from its other properties such as Mail, Maps, and so on, totalled almost USD 150b in 2021; amounting to almost 58% of the company’s revenues. Ad sales on YouTube, also owned by Alphabet, brought in another USD 28b. With the secular shift of the advertising spend to digital channels – over which Alphabet has a tight grip – we estimate the company has a share of around 40% of the digital advertising market and is probably the most valuable advertising property in the world…read more

2. Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 252

Amazon.com, Inc. engages in the retail sale of consumer products and subscriptions in North America and internationally. Amazon owns the biggest ecommerce platform in the world. In addition to this stable source of revenue, the company is one of the leading web services providers as well. The firm has stakes in other businesses, like publishing, food, and health. This makes the stock more resilient against macro pressures when compared to other tech giants.

On December 1, Cowen analyst John Blackledge maintained an Outperform rating on Amazon.com, Inc. stock and raised the price target to $160 from $150, noting that lower operating losses, excluding AWS and Advertising, are expected in 2023 for the firm as cost headwinds subside.

On November 11, Amazon announced its latest warehouse robot. Amazon says “Sparrow is the first robotic system in our warehouses that can detect, select, and handle individual products in our inventory.” The robotic arm uses AI and computer vision to recognize and handle millions of items. The company said that using AI-based robots can conduct more operations safely and efficiently.

On December 1st, Cowen analyst John Blackledge maintained an Outperform rating on Amazon.com, Inc. stock and raised the price target to $160 from $150, noting that lower Operating losses are expected excluding AWS and Advertising in 223 as cost headwinds subside.

At the end of the second quarter of 2022, 252 hedge funds in the database of Insider Monkey held stakes worth $30 billion in Amazon.com, Inc., compared to 271 in the preceding quarter worth $48 billion.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Amazon.com, Inc. was one of them. Here is what the fund said:

“Amazon.com, Inc. (NASDAQ:AMZN) is the world’s largest retailer and cloud services, provider. Shares of Amazon declined 35% in the quarter due to weaker-than-expected profits resulting from the overcapacity of resources coming out of COVID. We expect Amazon to grow its retail capacity in the coming quarters, enabling it to improve profitability accordingly. Amazon remains one of our largest holdings due to its durable competitive advantages with a leading position in multiple trillion-dollar markets with a long runway for growth (…read more)

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide. Microsoft has steadily transformed itself from just a software firm to one with huge stakes in the cloud, gaming, and hardware businesses. The firm also pays a dividend and has a healthy growth profile, a rare combination in the tech world that comprises mostly firms that reinvest profits in growth.

On October 26, RBC Capital analyst Rishi Jaluria maintained an Outperform rating on Microsoft Corporation stock and lowered the price target to $310 from $380, noting that several near-term headwinds are now expected to pressure financial year 2023 operating margins, which Microsoft management now expects to contract by a point.

At the end of the second quarter of 2022, 269 hedge funds in the database of Insider Monkey held stakes worth $61.2 billion in Microsoft Corporation, compared to 258 in the previous quarter worth $56 billion.

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Microsoft Corporation was one of them. Here is what the fund said:

“Shares of Microsoft Corporation, a leading global provider of software solutions, declined 16.6% in the quarter along with the broader software group as well as due to growing concerns of a potential macro-driven slowdown. This is despite the company posting strong quarterly financial results and successfully absorbing headwinds from the war in Ukraine. The company had 21% revenue growth, 23% operating income growth, and 35% growth in Microsoft Cloud (all year-over-year in constant currency), which now represents 47% of total revenues. (read more…)

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