3 Criminally Undervalued Software Stocks to Back Up the Truck On

The article argues that AI-driven fears have pressured SaaS valuations, but sees Procore, DLocal, and Intuit as mispriced relative to their underlying businesses. Procore is cited as 26% below highs with analysts expecting nearly 30% annual EPS growth and a $72 12-month target; DLocal is described as trading at just over 15x earnings and about 9x FCF ex-cash; Intuit is down nearly 40% from highs despite double-digit growth and trades below 15x forward earnings. Overall tone is constructive on select software names, emphasizing durable moats and valuation discounts rather than sector-wide weakness.

Analysis

The market is pricing AI as a universal margin destroyer for software, but the dispersion here matters more than the sector-level fear. The real line is between workflow software embedded in regulated, high-friction operating environments and software that is essentially a consumer interface layer. That creates a second-order winner/loser pattern: firms with auditability, compliance, and switching costs can actually gain share as buyers consolidate onto fewer mission-critical systems, while generic point solutions face both lower willingness to pay and higher churn.

PCOR and DLO are more interesting as business-model hedge assets than as pure growth names. If AI lowers the cost of building front-end software, the value shifts to data pipes, integrations, permissions, and local regulatory expertise—exactly where cross-border payments and construction management sit. That argues for multiple compression on low-moat SaaS and relative multiple expansion for infrastructure-like software, especially if capital markets continue rewarding predictability over raw growth.

The main risk is not that these businesses get replaced in 12 months; it is that growth expectations reset before fundamentals do. For INTU, the threat is a slower consumer tax franchise masking continued resilience in SMB and accounting workflows, so the stock can stay cheap longer than expected if investors keep anchoring on headline AI disruption. For ADBE, the negative read-through is that it becomes the comparator for every "easy-to-generate" workflow product, which can keep pressure on sentiment even if operating results hold up.

Consensus may be underestimating how quickly fear can reverse once AI adoption exposes implementation limits in regulated enterprise environments. If buyers discover that prompting cannot replace governance, integration, and error accountability, the market could re-rate the names with the strongest product stickiness in 6-12 months rather than waiting for perfect earnings inflection. The setup favors a barbell: own the names with real operational lock-in, fade the weakest software with the lowest switching costs.

Key Decisions for Investors

• Go long PCOR on weakness over the next 4-8 weeks; target a re-rating toward prior range highs as AI-disruption fears fade, with downside capped by net cash and enterprise switching costs.
• Initiate a long DLO / short ADBE pair trade for 3-6 months: own the company where AI is a marginal tool over a regulated payment rail, and short the name most exposed to commoditized creative workflows.
• Hold or add to INTU only on broader software drawdowns, not on AI headlines alone; use a 6-12 month horizon and size for a slower multiple recovery rather than near-term expansion.
• Buy PCOR or INTU call spreads 6-9 months out to express upside from sentiment normalization while limiting theta if the sector stays de-rated.
• Avoid chasing low-quality SaaS momentum names until there is evidence of durable net retention and pricing power; the next leg of the trade is likely a quality spread, not a sector-wide beta rally.