Why These 2 Best SaaS Stocks Could Win When AI Reshapes the Industry

When Anthropic unveiled its Cowork feature last week, software stocks tumbled. The move sparked fresh anxiety about whether artificial intelligence will render entire categories of business software obsolete. Yet for investors willing to look past the headlines, the selloff reveals something more nuanced: while the software industry faces genuine transformation, select companies are positioning themselves not as victims of AI but as its beneficiaries.

The current market turmoil echoes earlier warnings from industry heavyweights. Microsoft CEO Satya Nadella declared “SaaS is dead” in late 2024, and market research firm IDC projected in 2025 that traditional per-user, per-month pricing models would disappear by 2028, with 70% of software providers forced to adopt new business approaches. Anthropic’s Cowork—which extends Claude Code’s capabilities to handle file management, web searches, and task automation—demonstrates what this shift might look like in practice.

Yet doomsday scenarios overlook a crucial reality: not all software companies face equal risk. Some of the best SaaS stocks are those whose business models have already adapted to an AI-driven future. Two names stand out: Paycom and UiPath.

Paycom’s Smart Strategy: Already Selling Outcomes, Not Software

Paycom disrupted its own business model back in 2021 with the introduction of Beti, an automated payroll platform that empowers employees to manage their own compensation processing. The shift was radical—so effective at reducing errors and administrative overhead that Paycom initially saw declines in other revenue streams. But the trade-off proved worthwhile: Beti delivered exceptional value to clients, demonstrating that the company could thrive by selling results rather than software licenses.

This strategic positioning insulates Paycom from some AI-related disruption. Rather than relying on traditional software subscriptions vulnerable to replacement by intelligent agents, Paycom has already reoriented toward outcome-based solutions. The company reinforced this approach in mid-2025 with IWant, an AI-powered tool allowing users to query their data through natural language—voice or text—pulling from the unified database underlying Paycom’s entire product suite.

CEO Chad Richison called IWant “the biggest release since our founding in 1998,” signaling management’s confidence in the product’s importance.

From a valuation perspective, Paycom appears reasonably priced. Trading at roughly 16 times forward 2025 earnings estimates, with a 22% GAAP net margin, the stock reflects neither excessive optimism nor despair. Quarterly revenue growth of 9% year-over-year in Q3 2025 may seem modest, yet it masks Paycom’s true appeal: the company remains a minor player in payroll and HR software, with 2025 revenue projected at just above $2 billion. This creates a substantial runway for market share gains as competitors grapple with industry-wide transformation.

The primary downside risk is macroeconomic rather than technological. Should AI-driven productivity gains lead to fewer hiring decisions, layoffs, or business failures, employers would reduce payroll processing needs. For long-term investors, however, this risk is secondary to Paycom’s structural advantages.

UiPath’s Winning Formula: The Best of Both Technologies

If Paycom represents evolution, UiPath represents synthesis. The company operates in robotic process automation (RPA)—a field that, on the surface, faces existential threats from generative AI. Yet UiPath’s response has been sophisticated: combine RPA’s deterministic reliability with AI’s adaptive intelligence.

The logic is compelling. Large language models, while impressive, are statistical token generators prone to hallucinations and fabrications. RPA, by contrast, guarantees consistency—given identical inputs, workflows execute identically. But RPA’s brittleness poses problems: any change to an underlying system or interface breaks the automation.

Merging these technologies yields something neither could deliver alone: automation workflows that execute with RPA’s predictability while adapting through AI’s learning capabilities. This hybrid approach directly addresses what customers demand most: enterprise-grade automation delivering measurable return on investment.

CEO Daniel Dines framed this strategy during recent earnings: “Our automation strategy, combining the reliability of deterministic automation with the intelligence and adaptability of agentic AI, continues to align with what customers want most: trusted enterprise-grade automation that delivers tangible ROI fast.”

UiPath’s financial trajectory supports this narrative. Revenue growth accelerated to 16% year-over-year in the latest quarter, while the company’s dollar-based net retention rate reached 107%—indicating existing customers are expanding their usage significantly. These metrics suggest the market increasingly values UiPath’s approach.

At 21 times adjusted earnings estimates for the full year, UiPath stock is fairly valued given its growth trajectory. While the company will face competition from pure-AI automation startups, its platform’s emphasis on reliability and predictability gives it durable competitive advantages.

The Investment Thesis: When Markets Panic, Opportunities Emerge

Both Paycom and UiPath exemplify a broader principle: the companies best positioned to thrive during AI disruption are those that have already answered the fundamental question: What value do I actually deliver? Rather than selling generic software, both have repositioned around specific outcomes and customer needs.

The stock market’s recent panic reflects genuine uncertainty, not rational analysis. Market participants face legitimate questions about how AI will reshape enterprise software. Yet wholesale rejection of SaaS equities overlooks the nuance that distinguishes winners from losers.

The best SaaS stocks are not those that will resist AI—that’s futile. Rather, they’re the companies that will master AI, integrating it into customer-centric solutions that solve real business problems better and faster than pure AI alternatives can achieve alone.

For investors with conviction, the current selloff in software stocks presents precisely the opportunity such upheaval should create: a chance to buy high-quality businesses at attractive valuations while the crowd rushes for the exits.