At the beginning of 2026, investors were generally concerned about a bubble in artificial intelligence (AI). There is indeed a bubble bursting, but it is not happening in the AI stock sector. Due to market fears about the disruptive impact of AI technology, triggering a sell-off in high-valuation Software as a Service (SaaS) stocks, software shares have seen significant declines this year.
Data shows that as of February 25, the widely watched iShares Expanded Tech-Software Sector ETF (IGV) has fallen 24% since the beginning of the year. This ETF’s top holdings include Microsoft, Palantir, and Salesforce. While some of the sell-off seems justified given the sector’s excessive valuations and the rapid development of AI tools like Claude Code, some SaaS stocks may have been oversold. The following analysis suggests that two stocks, Figma (FIG) and Axon Enterprise (AXON), appear worth buying, especially following their recent earnings reports.
Figma went public just seven months ago, and its stock price has experienced a roller-coaster ride since then. The design software company’s stock surged initially after its IPO but has since trended lower, once dropping to $20 per share and shrinking its market capitalization to just $10 billion—half the value of the acquisition deal Adobe (ADBE) agreed to in 2022 (a deal later blocked by regulators). Although it has rebounded somewhat over the past week, the stock is still down 74% from its peak on its debut day.
However, the concerns surrounding Figma appear exaggerated. Not only is the company growing rapidly, but it has also demonstrated profitability according to Generally Accepted Accounting Principles (GAAP). The company has launched a series of AI products and is actively positioning itself in the AI field through both acquisitions and in-house development.
In fact, Figma’s just-released fourth-quarter earnings report showed its revenue growth is accelerating. Total revenue for the quarter increased by 40% year-over-year to $303.8 million, with net new revenue hitting a record high. Its net dollar retention rate was an impressive 136%, indicating that revenue from existing customers grew by 36% over the past year. Its AI products, such as Figma Make, saw strong growth, with weekly active users increasing by 70% quarter-over-quarter. Furthermore, Figma is working closely with Anthropic, suggesting AI startups are more likely to be partners than competitors. For example, it launched the Figma Model Context Protocol (MCP) application within Claude, expanded its Figma application within ChatGPT, and released a new Claude Code to Figma feature.
Figma expects first-quarter revenue growth to reach 38% and projects full-year adjusted operating income between $100 million and $110 million. Although Figma’s stock is still not cheap, it has rapidly gained market share from Adobe in recent years and possesses significant long-term growth potential. With its intelligent AI strategy, Figma is well-positioned to continue achieving strong growth.
Axon Enterprise has long been a stock market winner and has established itself as a clear leader in its niche. Axon is a law enforcement technology company, known for manufacturing TASER electroshock weapons, body cameras, and a suite of software programs that help law enforcement agencies manage records, evidence, prosecution, and related matters.
This TASER manufacturer also reported strong earnings. Its revenue grew by 39% year-over-year to $797 million, and its adjusted EBITDA reached $206 million, a 46% increase year-over-year. Beyond its impressive growth rates, Axon is also heavily investing in AI. It launched Draft One, a generative AI tool that automatically creates initial drafts of police reports based on footage from Axon body cameras and dashcams. The company also introduced an Automated License Plate Recognition (ALPR) product, expanded its vehicle intelligence initiatives, and is using AI to unify data across platforms, including within its emergency response plans.
Axon is not only countering the AI disruption narrative with its own AI products but is also forecasting revenue of $8 billion by 2028, implying an average annual growth rate of approximately 30% over the next three years. Even after the recent sell-off, Axon’s stock price remains high, but the company has built a strong competitive moat and is poised to maintain rapid growth for many years to come.
