We study the combined effects of dynamic gain saturation and two-photon absorption on the amplification of short pulses in semiconductor optical amplifiers and show that two-photon absorption can saturate the amplifier gain and limit the output pulse energies even for amplifiers with large gain saturation energies. We discuss the upper limits for the pulse energies obtainable from semiconductor optical amplifiers in the presence of two-photon absorption and show that for single transverse mode waveguide amplifiers these upper limits can range from values as small as a few picojoules to several hundred picojoules for pulse widths in the 0.5 ps to 20 ps range, respectively.