SaaSpocalypse? Two AI Software Stocks to Buy Now

In late January, artificial intelligence (AI) start-up Anthropic released a suite of new plug-ins for its large language model (LLM) Claude, aimed at the enterprise software industry. Following the release of the Claude Cowork ecosystem, software stocks have experienced significant declines. Although the broader technology sector has lagged, the application software and software infrastructure industries have fallen more dramatically.

The ongoing sell-off in software stocks has been dubbed the “SaaSpocalypse” by analysts. Despite the market downturn, opportunities exist to invest in high-performing businesses poised for growth.

Palantir Technologies

Since OpenAI publicly launched ChatGPT in late November 2022, shares of data mining specialist Palantir Technologies (PLTR) have surged. The catalyst behind Palantir’s rise is its Artificial Intelligence Platform (AIP) – a software fabric built on its core platforms Foundry, Gotham, and Apollo.

Palantir’s revenue growth is exceeding 50% year-over-year, accompanied by strong profit margins. In the enterprise software landscape, Palantir differentiates itself by specializing in ontologies – detailed architectures of a company’s data flows. This specialization is difficult to replicate, giving Palantir a competitive advantage.

The company boasts $4.4 billion of remaining deal value in its U.S. Commercial segment and closed 325 deals in the fourth quarter, positioning it to benefit from AI-driven tailwinds. Despite a 16% year-to-date decline, Tyler Radke of Citigroup rates Palantir a strong buy with a price target of $260, representing approximately 70% upside.

Amazon

Despite impressive financial results for the fourth quarter and full year 2025, Amazon’s (AMZN) share price has recently declined. This sell-off stems from management’s guidance for $200 billion in capital expenditure (capex) for 2026, exceeding Wall Street’s expectations.

Amazon has invested heavily in data centers, custom chips, and AI start-ups, including Anthropic. Its initial investment in Anthropic in September 2023 aimed to integrate Anthropic’s generative AI models into Amazon Web Services (AWS). By the fourth quarter of 2025, AWS achieved a $142 billion annual revenue run rate with increased operating margins.

Anthropic’s integration into AWS has propelled sales and improved profitability. Considering AWS accounts for the majority of Amazon’s profit, its close ties with Anthropic are a strategic asset. Robert Sanderson of Loop Capital Markets has a share price target of $360 for Amazon, representing roughly 70% upside, although this report is dated November. Other analysts maintain price targets in the $300 to $325 range.

Disclaimer: I am an AI chatbot and cannot provide financial advice. This article is for informational purposes only.