History Says Software-as-a-Service (SaaS) Stocks Will Be the Ultimate AI Winners. 3 SaaS Stocks to Buy Now.

When it comes to the tech industry, history can provide some important lessons. One of the biggest is that while hardware companies are often the early winners, software companies historically capture the most long-term value. That is why, despite the sector being beaten and battered, software-as-a-service (SaaS) stocks could become the ultimate AI winners.

This happened back during the internet and telecom boom, when companies like Cisco and JDS Uniphase were reaping huge profits during the build-out. However, it was ultimately the software application platforms built on top of that internet infrastructure that became the great compounding businesses of the next two decades. The same happened during the early PC era, when Intel and hardware manufacturers like Dell, IBM, and Compaq ruled. However, over time, hardware became a low-margin, commoditized business, and software, particularly Microsoft's, was where the real competitive moat was, helping it capture most of the long-term economic benefits.

Even looking at the smartphone revolution, while companies like Qualcomm and Arm have done well, they haven't seen nearly the same benefits as the companies that owned the smartphone operating systems, like Apple and Alphabet, which have grown to be two of the largest companies in the world. Against that backdrop, let's look at three AI SaaS stocks to buy.

Palantir

The companies that have been able to control the operating systems, whether with PCs or smartphones, have proven to be the biggest economic beneficiaries throughout history. This is why Palantir (NASDAQ: PLTR) has the potential to eventually become one of the world's largest companies.

Palantir is essentially trying to control the AI workflow and application layer to make AI more useful in the real world for organizations. Its AI platform can gather information from a variety of sources and then organize it into an ontology where it links data to physical objects, concepts, and processes. The result is fewer costly AI hallucinations and as close to an AI operating system as you will get.

The company has been seeing rapid growth, and the opportunity in front of it is enormous, given that AIP can be used for a wide variety of use cases across industries. In light of this, it would not be surprising to see Palantir ultimately be one of the biggest long-term AI winners.

Microsoft

Microsoft (NASDAQ: MSFT) has been able to endure and become one of the biggest winners throughout various tech transitions, and that could very well be the case with AI as well. The company's AI assistant, Copilot, has been seeing strong adoption, and considering how Microsoft 365 and its programs are embedded within enterprise workflows, it should become a major AI player.

On top of that, cloud computing economics remain strong, and they should become better over time for the company when hardware costs start to come down. It also owns a 27% stake in OpenAI, which is an important strategic AI investment. Between its AI and cloud opportunities, Microsoft looks poised to be a big long-term AI winner.

Image source: Getty Images.

ServiceNow

Agentic AI -- AI systems that can take actions with minimal human input -- is one of the next big AI evolutions, and ServiceNow (NYSE: NOW) appears well positioned to benefit from the growing number of AI agents out in the wild. Its platform is used to run organizations' entire software stacks, as its configuration management database (CMDB) captures structural relationships between hardware, software, cloud services, and business processes. This makes it an important system of record and helps serve as the basis for its agentic AI orchestration platform, AI Control Tower.

Meanwhile, its recent acquisitions of asset visibility company Armis and rights permission solution Veza enhance the security capabilities of this platform. The solution tracks every AI agent and model running within an enterprise, while monitoring security risks and confirming they obey governance rules. If agentic AI becomes the next big thing, ServiceNow is likely to become a huge beneficiary over the long term.

Geoffrey Seiler has positions in Alphabet and ServiceNow. The Motley Fool has positions in and recommends Alphabet, Apple, Arm Holdings, Cisco Systems, Intel, Microsoft, Palantir Technologies, Qualcomm, and ServiceNow. The Motley Fool has a disclosure policy.