AI has become a defining theme throughout the tech sector, driving much of the industry’s attention while helping to drive strong revenue growth over the past few years. At the same time, it is changing the software industry, where the rise of AI agents has raised concerns that some traditional software-as-a-service (SaaS) products may become less valuable or even unnecessary as AI takes over tasks that once required dedicated applications. These concerns have given rise to what analysts have dubbed the “SaaPocalypse”.
End of Quarter Sale – 70% Off
However, Goldman Sachs’ Gabriela Borges sees a potential path toward a software revival, arguing that some companies stand to benefit as AI reshapes the industry and creates new product opportunities. In particular, the analyst believes that the customer experience software market offers attractive near- to medium-term opportunities.
“The customer experience market is in an AI-driven evolution, with significant disruption to entrants in one market segment (customer service) causing investors to question the sustainability of the entire category. Based on our industry conversations and fundamental analysis, we come to the following key conclusions: 1) tailwinds for companies that are likely to be able to disrupt service over many years. Term driver offside and 2) marketing is a is relatively flexible as a category because these companies typically have different underlying infrastructure layers, which we think is misunderstood in the market today,” said Borges.
Based on this approach, Borges has selected two software stocks that he believes are positioned to take advantage of the turnaround. Analysts see each climbing at least 60 percent over the next 12 months. We turned to the TipRanks database to examine his picks and the reasoning behind them.
Clavio (KVYO)
The first of Goldman’s picks that we’re looking at here is Klaviyo, the leader in business-to-customer CRM, or customer relationship management. Klaviyo’s subscription-based data platform uses AI to analyze customer data and interactions, allowing business users to better understand customer behavior.
As with all CRM, the key impact here, for Klaviyo users, is the ability to put together direct marketing efforts that are better branded, better targeted and more effective. Klaviyo’s agent AI tech is a key part of this picture, providing automated agents who see the entire customer picture, including purchase history and real-time data. In short, Klaviyo gives its users chatbots that are smart and capable, capable of recommending products, helping the user shop, and advancing the conversation around the clock – much more than just answering questions.
Klaviyo has also developed an AI help desk. Business customers gain the benefits of AI agents that read the entire customer database, including the complete history of each customer’s interaction with the business, marketing engagements, and loyalty status. The company’s AI agents are also able to hand off customer contacts to human agents, providing contact history and context for a seamless, efficient switch.
Ultimately, Klaviyo has been able to leverage these capabilities to become a popular B2C CRM choice for direct marketers and e-commerce vendors. As of March 31 of this year, the company had more than 196,000 customers and nearly $358 million in quarterly revenue – and 28% year-over-year revenue growth. The company realized bottom-line non-GAAP earnings of 22 cents per share in 1Q26, beating forecasts by 2 cents per share.
Despite those solid results, the company’s stock fell sharply after the earnings release following the announcement that CFO Amanda Whalen would step down in August. Whalen guided Clive through its transition to the public markets, and his departure created uncertainty as the company began its search for a new CFO. Also, there are concerns about future revenue growth. Guidance for the rest of the year points to 23% year-over-year revenue growth, a sharp slowdown from the 28% posted in Q1.
But Borges of Goldman Sachs has made a case for change, arguing that the recent selloff has created an opportunity rather than signaling a deterioration in the business.
“Klaviyo’s exposure to a wide variety of growth vectors gives us confidence in the health of the underlying business, especially with revenue growth still in the 20s. We believe in Klaviyo’s ability to 1) continue to expand with its existing customer base and within the Shopify ecosystem, 2) expand into new markets, leverage outside e-markets and international markets, multiple new product cycles (service and AI) in our view, this Gives Clive multiple ways to outperform over the medium term,” opined the analyst.
Based on this stance, Borges maintains a buy rating on Klaviyo, along with a price target of $26, suggesting a 74.5% upside over the next year. (To see Borges’ track record, click here)
So, that’s the Goldman point of view. But what about the rest of the street? If anything, it’s even faster. All 19 analysts covering KVYO rate it a buy, giving the stock a consensus rating of Strong Buy. With the stock trading at $14.90, the average price target of $29.94 implies a one-year upside probability of ~101%. (See KVYO Stock Forecast)
Breeze(BRZE)
The next stock on our list of Goldman picks is Braze, a software company focused on improving and enabling customer engagement for an enterprise client base. Breeze gives its customers access to a platform that builds on multi-channel and cloud-based marketing and, importantly, allows customers to drive sales by building solid relationships with their target audience. Braze has designed its platform to prioritize end users from information transfer, or ‘discovery,’ to purchase – and to do so at whatever speed is appropriate.
It is a data-driven approach, designed to build platform functionality by pulling data from a wide range of sources. This extensive data foundation allows Breeze’s clients to engage customers throughout the marketing funnel. The platform uses AI to deliver personalized messaging and real-time data analysis, making Braze a leader in AI-powered customer engagement.
BrazeAI, the company’s dedicated AI platform, helps businesses keep their marketing efforts effective as technology and consumer expectations continue to evolve. It uses AI to generate personalized messages, content and product recommendations while analyzing customer data in real time to improve engagement. BrazeAI also automates key marketing workflows, helping to move customers through the sales funnel more efficiently. This streamlined process enables faster response to customer needs and ultimately contributes to stronger sales and marketing processes.
However, Breeze’s latest quarterly results gave investors some mixed signals. With its fiscal 1Q27 report, the company raised its full-year revenue guidance to between $895 million and $899 million, up from its previous outlook of $884 million to $889 million. However, it left its full-year non-GAAP EPS guidance unchanged at $0.61 to $0.65. That disappointed investors, as the high-income outlook suggested strong growth, but not much profitability.
What we saw in the top and bottom lines for fiscal 1Q27 is the result. Revenue, at $211 million, was up 30% year-over-year and beat forecasts by $5.8 million — but non-GAAP quarterly EPS of 10 cents, while up 3 cents year-over-year, missed expectations, in line with forecasts.
Nevertheless, Borges, in his coverage of the stock, charts a positive course: “We see Braze in a position to continue to take away legacy marketing tools as AI increases the pressure of legacy tech debt within organizations. Braze’s ability to empower marketers to run sophisticated campaigns is becoming more important as we believe Braze is improving customer expectations for health. Unit economics is moving forward, which We are confident that Breeze can deliver 20 per cent operating margin by 2029.”
Goldman analysts set a Buy rating here and support it with a price target of $34, indicating a one-year upside of ~62%.
Overall, Breeze stock also receives a consensus Strong Buy consensus rating based on 17 recent analyst reviews. Shares are trading at $21.02, and their average target price of $35.07 indicates upside potential of ~67% over a one-year horizon. (See BRZE Stock Forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment..
