In this article, we discuss the 5 best tech-as-a-service (TaaS) stocks to buy now. If you want to read about some more tech-as-a-service stocks, go directly to 11 Best TaaS Stocks to Buy Now.
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. (NASDAQ:ADBE) 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. (NASDAQ:ADBE) 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. (NASDAQ:ADBE) was one of them. Here is what the fund said:
“Late in the quarter, one of our smallest positions, Adobe Inc. (NASDAQ:ADBE), 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. (NYSE:CRM), 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. (NYSE:CRM) was one of them. Here is what the fund said:
“Salesforce, Inc. (NYSE:CRM) 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. (NASDAQ:GOOG) 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. (NASDAQ:GOOG), 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. (NASDAQ:GOOG) 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. (NASDAQ:AMZN) 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. (NASDAQ:AMZN) 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. (NASDAQ:AMZN) 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. (NASDAQ:AMZN), 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. (NASDAQ:AMZN) 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 (NASDAQ:MSFT) 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 (NASDAQ:MSFT) 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 (NASDAQ:MSFT), 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 (NASDAQ:MSFT) was one of them. Here is what the fund said:
“Shares of Microsoft Corporation (NASDAQ:MSFT), 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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