History Says Software-as-a-Service (SaaS) Stocks Will Be the Ultimate AI Winners. 3 SaaS Stocks to Buy Now.
Palantir, Microsoft, and ServiceNow look like potential big AI SaaS winners.
Overview
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.
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Originally published at www.fool.com.