The sell-off in SaaS, or software stocks, sent shares of Adobe Systems (ADBE) and Duolingo (DUOL) to multi-year lows. At these levels, which of these stocks are a buy?
The market fretted over AI taking Adobe’s creative suite of software subscriptions. Users have a plethora of AI to generate images and videos cheaply and quickly. By comparison, Adobe Firefly is a generative AI subscription for customers. Despite an annual recurring revenue of 75% Q/Q in the last quarter, investors are not impressed.
ADBE stock is hovering at prices not seen since 2018-19.
Duolingo (DUOL) is a language tutoring app on mobile devices. Despite shares falling, the forward P/E is nearly 40 times, so the stock is still trading at a premium. The company needs to convince shareholders that it has a strong business moat. Moreover, it needs to sustain a rebound in active users this year. Weak figures would suggest that people will use AI to create language tutorials at no cost, instead.
Software Stock Selloff
Both stocks are compelling stocks to buy. To consider a starter position, investors need to wait for the sell-off in software stocks to end. ServiceNow (NOW), for example, fell steadily throughout 2026. It dropped from $182 to the low $90s in April. Even established firms like Salesforce (CRM), Snowflake (SNOW), and Intuit (INTU) faced selling pressure.
The sector needs sentiment shifting to the upside. Until then, add those stocks to the watch list.
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