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Amid the "SaaS Apocalypse", These 3 Names Are Boosting Buybacks
Authored by Leo Miller. First Published: 2/16/2026.
Key Points
- The massive decline in software stocks, dubbed the "SaaS Apocalypse," has left many names deeply in the red during 2026.
- However, three software names are expressing confidence going forward, increasing their buyback capacity.
- Two names now have buyback authorizations equal to 9% or more of their market caps.
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To the frustration of many investors, the sell-off in software stocks has yet to see a meaningful rebound. The iShares Expanded Tech-Software Sector ETF (BATS: IGV), a proxy for the industry's performance, is down nearly 22% in 2026.
Amid this weakness, several software companies are taking a visibly confident step: announcing share buyback authorizations. For these beaten-down names, managements are signaling they believe the market is undervaluing their shares.
DT: Keeping a Lid on 2026 Losses and Boosting Buyback Capacity
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First up is observability-platform provider Dynatrace (NYSE: DT). Its software helps customers monitor the performance of business-critical applications, identify bottlenecks and other issues, and address problems quickly.
Dynatrace shares have held up better than many peers in 2026, down about 14%. That resilience was partly driven by the firm's latest earnings report, in which it beat estimates on revenue and adjusted earnings per share (EPS).
The stock jumped roughly 7% after the results, but it remains about 40% below its 52-week high.
Dynatrace also announced a $1 billion share repurchase authorization — roughly 9% of the company's ~ $11 billion market capitalization. That authorization is twice the size of the company's prior program from May 2024, when Dynatrace shares traded at significantly higher levels. Management said the new buyback "underscores the view that our shares are undervalued."
PEGA's Buyback Capacity Soars Above 10% of Its Market Cap
Pegasystems (NASDAQ: PEGA) has fared worse in 2026, with shares down about 26% year to date. The tech firm offers business process management (BPM) software that automates internal workflows. Its GenAI Blueprint tool, which lets companies build or enhance tools with minimal coding, is a notable example of how it is adapting to the AI era.
As investors worry that AI could simplify coding and disrupt traditional software models, Pega is positioning itself to benefit from that shift.
Despite beating sales and adjusted EPS estimates, Pegasystems shares fell nearly 12% after the report, after investors reacted to guidance for 2026 that fell short of expectations.
Pega announced an additional $1 billion buyback authorization — roughly 13.5% of its ~ $7.4 billion market capitalization. The company said only that the authorization "reflects our confidence in the durability of our cash flows and our commitment to disciplined capital allocation." Regardless, the program's size relative to market cap suggests management sees value in the stock.
Down 30% in 2026, SHOP Announces $2 Billion Buyback Plan
Finally, e-commerce platform Shopify (NASDAQ: SHOP) has been a particularly large loser in 2026, down about 30%. Its platform, which enables businesses to build and operate direct-to-consumer e-commerce storefronts, has experienced strong growth.
Shopify has delivered year-over-year revenue growth of 20% or more for 14 consecutive quarters and beat sales and earnings estimates in its latest report. Still, the stock fell more than 6% on each of the two trading days following the release.
The company also unveiled a $2 billion buyback authorization. While larger in absolute dollars than the DT and PEGA programs, it represents only about 1.4% of Shopify's roughly $146 billion market capitalization. It is nevertheless a positive signal — particularly because there appears to be no record of prior buyback plans at Shopify.
Buybacks: One Positive Indicator Amid Software's Stumble
Buybacks are a constructive vote of confidence from managements, but investors should remain mindful of the broader headwinds facing the software industry.
Markets are increasingly worried that incumbents' growth could be constrained by the rapid rollout of new artificial intelligence (AI) tools. Those releases are likely to continue, potentially extending the sector's challenges. As a result, investors attempting to "buy the dip" in software stocks should be selective and weigh buyback signals alongside long-term competitive risks.
Down 41% in 2026, Reasons for AppLovin Optimism Remain
Authored by Leo Miller. First Published: 2/16/2026.
Key Points
- AppLovin shares have sold off sharply in early 2026 despite strong revenue and earnings beats.
- Investor fears center on new competition from Meta Platforms and startup CloudX.
- However, the company's growth remains highly impressive, and analysts are forecasting more than 50% upside.
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Few stocks in the S&P 500 have had a worse start to 2026 than advertising technology giant AppLovin (NASDAQ: APP). After delivering returns of more than 700% in 2024 and over 100% in 2025, AppLovin shares are now down more than 40% year to date.
That weakness reflects several factors. AppLovin began the year trading near its all-time high, but software and ad-tech names broadly have come under pressure in 2026. A new competitive threat specific to AppLovin knocked shares down about 16% on Feb. 4, and the stock fell nearly 20% on Feb. 12 after investors digested the company's latest earnings report.
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I predicted the 1987 crash six weeks early. I called the fall of the Berlin Wall. I pinpointed the exact bottom in 2009.
Now I'm staking my reputation on March 26, 2026 - the day I believe Elon will announce the SpaceX IPO.
Bloomberg is calling it "the biggest listing of ALL TIME."
A $1.5 TRILLION valuation... the "wealth-building" moment of the decade.
Today, I'll show you how to get in before the big announcement.
Still, amid this sell-off there may be compelling reasons to consider buying AppLovin while it's on sale. Here's why.
AppLovin Posts Solid Beats, But Faces Questions About Meta Competition
In Q4 2025, AppLovin reported revenue of $1.66 billion, a 66% year-over-year increase that topped estimates of $1.61 billion. Earnings per share rose 87% year over year to $3.24, beating expectations of $2.89. Adjusted EBITDA margin moved to over 84%, roughly 200 basis points higher than in Q3 2025.
For the next quarter, the company projects revenue of $1.76 billion at the midpoint, implying about 52% growth, and expects adjusted EBITDA margin to hold near 84%. That guidance exceeded analyst expectations, but the market was looking for even more upside.
Analysts' questions about the possibility of increased competition from Meta Platforms (NASDAQ: META) likely unsettled investors. AppLovin has built deep, specialized expertise in mobile game advertising, and it's not clear Meta will prioritize aggressively pursuing this niche. Meta's scale and technology could enable disruption, but doing so would require meaningful investment. Given Meta's projected 2026 revenue of roughly $250 billion versus about $8 billion for AppLovin, the financial incentive to pursue this segment aggressively may be limited. Still, the risk deserves monitoring.
CloudX: A Threat Investors May Be Overweighting
On Feb. 4, startup ad-tech company CloudX announced general availability of its platform, which spooked investors and triggered the sharp sell-off that day.
The concern is understandable. CloudX founders Jim Payne and Dan Sack were also involved with MoPub and MAX—technologies AppLovin acquired that have been important to its success. The fact that these innovators are building a new product that could compete with AppLovin is a legitimate worry.
But it's debatable whether CloudX represents the existential threat implied by AppLovin's stockdrop. In a recent interview, Payne and Sack made remarks that are telling:
- "I think we can actually bring more people into the mobile ads ecosystem and grow the entire market, and that's where our growth is going to come from."
- "We actually avoid the word 'move' because it is inaccurate to say that we ask people to move. We don't ask people to move. We're looking to be additive."
Importantly, the founders are not pitching CloudX as a tool that forces mobile app developers to switch away from AppLovin. Rather, they position CloudX as an additive solution that can unlock incremental demand and expand the overall market.
The in-app advertising market is forecast to grow at a compound annual growth rate of more than 12% from 2025 to 2033, according to Grand View Research, suggesting total addressable market expansion that could outpace either company's ability to materially erode the other's share.
While the founders' comments don't eliminate competitive risk, the panic-driven sell-off indicates investors may be treating CloudX as a more immediate and severe threat than the founders' stated strategy suggests.
Growth, Profitability and Analyst Support
AppLovin now trades at a forward price-to-earnings (P/E) ratio near 25x, a level not seen since September 2024.
The company expects about 52% revenue growth next quarter and is among the most profitable firms in the market. AppLovin's free cash flow margin of 72% over the past 12 months is the highest of any technology stock in the S&P 500.
The consensus 12-month price target for AppLovin sits near $652, implying roughly 78% upside. The average of analyst targets updated after the company's earnings report is about $670, suggesting roughly 83% potential upside.
Overall, AppLovin is a highly volatile stock and one that requires a high degree of investor conviction. Still, the company's strong growth, exceptional profitability and favorable analyst targets give reasonable grounds to believe the stock could stage a substantial recovery from current levels.
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