As a long-term investor, I’m used to rocky periods of volatility in my Stocks and Shares ISA. Normally, it’s water off a duck’s back, but the stomach-churning turbulence in 2026 has been quite extraordinary.
Nevertheless, I continue to add money to my portfolio when I can as I aim to build long-term wealth. I bought four stocks recently, including Ferrari and LondonMetric Property.
Here are the other two, which I think are worth considering today.
SaaS Apocalypse
Sage Group (LSE:SGE) has been caught up in the historic sell-off in the software sector (dubbed the ‘SaaS Apocalypse’). The FTSE 100 stock is down 40% in just over a year!
Sage provides accounting software for millions of small and medium-sized enterprises (SMEs). The market fear is that powerful new AI models will end up eating the company’s lunch.
However, entire finance teams are trained on Sage. Switching to a new AI platform might require re-training every employee, which many SMEs probably won’t risk doing.
Moreover, Sage has its own Copilot generative AI assistant that does similar things (automating invoices, chasing payments, spotting errors, etc). But crucially, it does these inside the trusted environment where the customer’s data already lives.
CEO Steve Hare called the notion that AI agents means nobody needs accountants anymore “completely ludicrous“.
After plummeting 25% year to date, the stock is trading at just 14.5 times fiscal 2027’s forecast earnings. For a quality tech company still growing profits by double digits, that looks far too low to me.
There’s also a well-covered forecast dividend yield of 3.2%.
Down 73%
The second stock I bought was language learning leader Duolingo (NASDAQ:DUOL). Down 73% in a year, this has also been put in the skip lately due to AI fears.
The news that sent the stock down 12% this week was T-Mobile launching a tool that allows users to translate phone calls in real-time.
To borrow Sage CEO’s language, this latest sell-off appears ludicrous. Duolingo is an AI-powered learning app, not a translation tool. Most of its 11.5m paid users are learning a language to get a job, study abroad, integrate into a culture, or simply for fun.
AI enhances the user experience rather than destroys the business model. We haven’t got Q4 earnings yet but Duolingo says daily active users grew roughly 30%, despite the existing threat from Google Translate and ChatGPT.
Q4 bookings might even be slightly above the high end of previously announced guidance of $329.5m to $335.5m. That would represent growth of roughly 23%, despite the firm currently prioritising long-term user growth over short-term bookings/profits.
Going off 2026’s forecast, the enterprise value-to-free-cash-flow (EV/FCF) ratio is now around eight, down from 61 in 2023. So the market basically thinks this growing business is toast, which I’m betting is not the case.
Foolish takeaway
Of course, I might be wrong about these two stocks. Perhaps Sage will lose customers to new AI tools, limiting its pricing power.
Meanwhile, Duolingo’s user base may dwindle as people stop learning languages and instead rely on live translation tools. I accept both Sage and Duolingo could head lower as more powerful AI models are released.
Yet I believe that this tech/software crash is creating lucrative buying opportunities, especially as the fear spreads to other areas of the stock market.
