The Smart Money Is Buying the Tech Stocks Retail Investors Are Panic-Selling
Key Points
Salesforce and ServiceNow have been caught up in the steep sell-off of SaaS stocks.
However, both companies believe their stocks are oversold and are aggressively buying back shares.
The pullbacks for Salesforce and ServiceNow present tremendous buying opportunities for investors.
- 10 stocks we like better than Salesforce ›
Remember the tale about Chicken Little? The young chicken believes that the sky is falling and begins warning everyone. In the original fable, though, Chicken Little actually was hit in the head by an acorn. The morals of the story are: don't jump to conclusions and don't succumb to mass hysteria.
Some investors could be modern-day versions of Chicken Little. Worries that artificial intelligence (AI) could replace software tools have led to a sell-off of SaaS stocks that was so extensive it's been nicknamed the "SaaSpocalypse." However, while many retail investors have been panic-selling, the smart money is buying some exceptional tech stocks at a discount.
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Smart money picks
Salesforce (NYSE: CRM) ranks among the most widely followed SaaS stocks. The company pioneered cloud-based customer relationship management (CRM) systems and remains the industry leader. It also owns popular team collaboration platform Slack and visual analytics platform Tableau.
This top tech stock has plunged so far this year. However, Salesforce generated record fourth-quarter results. Management projects double-digit revenue growth again in the current fiscal year.
Some believe AI will hurt Salesforce's growth. But the people with the most knowledge about the company -- its management team -- think otherwise. Salesforce initiated a $50 billion stock buyback program in February 2026. Earlier this month, the company began repurchasing half that amount. CEO Marc Benioff said, "We are aggressively repurchasing shares because we are so confident in the future of Salesforce."
ServiceNow (NYSE: NOW) hit a home run with its Q4 results. The business workflow software company reported total revenue of $3.56 billion, up 20.5% year over year. It also provided strong guidance for the full year 2026. However, the sell-off in SaaS stocks has contributed to ServiceNow's share price sinking in recent months.
CEO Bill McDermott addressed the AI disruption concerns head-on in ServiceNow's Q4 earnings call. He argued, "Enterprise AI will be the largest driver of return on the multitrillion-dollar super cycle of investment in AI infrastructure." McDermott added that ServiceNow's AI platform is "more strategically relevant today than ever."
Backing up this optimism, the company's board approved an additional $5 billion of stock buybacks. McDermott also committed to ServiceNow's success, extending his contract through at least 2030.
Take advantage of Mr. Market's irrational behavior.
Warren Buffett's mentor, Benjamin Graham, once wrote about an allegorical figure, "Mr. Market," who sometimes behaved irrationally by selling stocks at exceptionally attractive prices. I think the "SaaSpocalypse" is a great example of this phenomenon, especially with Salesforce and ServiceNow. Forward-thinking investors should consider taking advantage of the tremendous opportunity that Mr. Market has given to them.
Should you buy stock in Salesforce right now?
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce and ServiceNow. The Motley Fool has a disclosure policy.
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