Summary: Morgan Stanley has pinpointed two SaaS companies it views as best positioned heading into the upcoming Q1 earnings cycle. The bank highlights Samsara for continued acceleration in net new annual recurring revenue (ARR) and a rising contribution from newer products, and Box for an improving growth profile driven by billings, recurring revenue and AI-enabled upsell potential. These calls come as the broader SaaS market contends with weaker enterprise spending and uncertainty over how quickly companies will monetise AI investments.
Samsara - traction across new products and large customers
Morgan Stanley expresses optimism on Samsara following a third straight quarter in which net new ARR growth accelerated. The brokerage underscores a 31% year-on-year gain in constant-currency net new ARR in Q4 as evidence of momentum. It also points to notable large-customer activity: 204 net new customers added more than $100,000 in ARR, and the company closed 13 deals with annual contract value above $1 million.
Analysts at Morgan Stanley emphasize the role of product expansion in driving recent results. Emerging products now account for 23% of net new annual contract value, up from 8% two quarters earlier. The firm also highlights several structural growth levers that could support further upside - multi-product adoption among existing customers, international expansion and deeper enterprise penetration. Morgan Stanley frames these strengths against a backdrop in which customers are more focused on operational efficiency and cost optimisation amid a softer macroeconomic environment.
Box - improving algorithm and AI-led upsell potential
Box is another preferred idea for Morgan Stanley. The brokerage points to an "improving growth algorithm" underpinned by stronger billings and recurring revenue growth, alongside opportunities to upsell through AI-enabled features. Box's higher-tier Enterprise Advanced package, which carries a 30-40% pricing premium relative to Enterprise Plus, has quickly gained traction and already represents nearly 10% of revenue within a year of launch.
Supporting the constructive view, Morgan Stanley highlights 17% year-on-year growth in remaining performance obligations (RPO) and a stable 104% net retention rate. The firm also notes accelerating adoption of AI-powered governance and workflow tools among regulated industries as an additional tailwind. From a valuation perspective, Morgan Stanley states Box appears attractively priced at roughly 10x calendar-year 2027 free cash flow, below the SaaS peer average of around 16x. The brokerage sees potential upside from enterprise expansion, seat growth and broader consumption of AI platform capabilities over coming quarters.
Context and market backdrop
Morgan Stanley's recommendations come amid two sector-wide headwinds explicitly cited by the brokerage: slowing enterprise spending and lingering uncertainty about AI monetisation. Those dynamics frame the analysts' preference for companies that demonstrate durable ARR growth, clear enterprise traction and tangible product-led momentum tied to AI features.
Implications - The bank's focus on operational efficiency, product expansion and valuation differentials may be of particular interest to investors focused on software earnings quality, cash flow conversion and the pace at which AI features convert into measurable revenue growth.