Wall Street’s so-called “SaaSpocalypse”, that is, the sharp drop across traditional software companies in recent weeks, has been driven by one dominant fear: that artificial intelligence (AI) will automate away the very functions of these software companies. If AI can enable its customers to handle tasks such as marketing workflows, customer relationship management, and identity verification autonomously, why would they pay premium subscription fees to companies that provide software-as-a-service (Saas)?
That logic has triggered heavy selling across the sector so far this quarter, but the reality is more nuanced. These platforms, and many of their peers, are not simply static tools waiting to be replaced. They are deeply embedded systems that increasingly integrate with AI rather than compete with it.
With sentiment now thoroughly washed out and several of these names sitting near multi-year lows, the risk-reward profiles of a few companies in this space are starting to look attractive. Let’s take a look at three in particular.
HubSpot: Oversold, But Quietly Stabilizing
Down over 60% over the last year, HubSpot Inc (NYSE: HUBS) has endured one of the steepest drawdowns among large-cap SaaS names. Its shares set a fresh low immediately after earnings in mid-February, despite once again beating expectations on the headline numbers. That reaction alone tells you how fragile sentiment has become.
Since then, however, the bulls have begun to fight back. HubSpot shares have avoided a new low, and its relative strength index (RSI) has started moving out of extremely oversold territory.
That combination often signals that selling pressure is exhausting itself and that a foundation may be forming.
Fundamentally, this does not look like a broken business. Revenue is still growing at roughly 20% year-over-year, retention remains solid, and customer stickiness is intact.
Management has also authorized a fresh share repurchase program, a clear signal that leadership believes the stock is materially undervalued. Analyst support reinforces that view. Citigroup, UBS Group, and RBC have all reiterated Buy ratings in recent weeks, with Citigroup’s $640 price target implying more than 150% upside from the current levels.
Salesforce: Sentiment Bruised, But Not Broken
Salesforce Inc (NYSE: CRM) was also caught in the downdraft. Shares are down over 40% from last year’s high, dragged lower by concerns that AI could compress CRM functionality and by broader investor risk-off sentiment across the enterprise software space.
The latest earnings report, released after the bell on Feb. 25, did little to calm nerves. Sure, the company beat non-GAAP EPS expectations and delivered revenue in line with estimates, but its near-term guidance came in soft.
Even so, the stock traded higher the day after earnings, and a rebound could gain steam if shares stay clear of $175, which has become a critical support level. As long as it holds, the setup remains one of potential consolidation rather than collapse. Analyst conviction has also not evaporated—in fact, it’s been the opposite, with Wedbush reiterating its bullish stance this week, setting a $375 price target.
That’s implying nearly 100% upside from current levels. If CRM shares can find their footing above their recent low, the recent drop may come to be seen as a buy-the-dip opportunity rather than a warning sign.
Okta: High Risk, High Reward Ahead of Earnings
Of the three, Okta Inc (NASDAQ: OKTA) carries the most near-term uncertainty. Its shares have essentially flatlined since summer 2022 and remain far below post-pandemic highs. More recently, the stock is down about 40% from last summer’s peak, reflecting skepticism about the durability of growth and competitive pressures.
Okta's March 4 earnings report will be pivotal. Investors will be watching closely, particularly after Salesforce’s softer forward guidance. While Okta’s shares have been working to form a low in recent sessions, a poor report could easily extend the malaise and justify the market’s caution.
That said, analyst optimism remains present. Truist Financial recently reiterated its Buy rating with a price target around $115, implying roughly 60% upside from current levels. The risk-reward dynamic is more nuanced here than with the other two stocks, however.
Okta needs its upcoming report to confirm that the worst-case scenario is not materializing, that AI fears have been overstated, and that the market’s caution has gone too far. If it can demonstrate stability and resilience, the snapback potential could be meaningful. If not, investors’ patience will be tested further.
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The article "After a Brutal Selloff, Are These 3 SaaS Giants About to Bounce?" first appeared on MarketBeat.
