The “SaaSpocalypse,” a term coined in February after Anthropic’s Claude Cowork agent tools triggered a severe selloff in software stocks, is reportedly over, according to Orlando Bravo, founder of Thoma Bravo, a major software-focused private equity firm. Bravo, speaking at the SuperReturn International conference in Berlin, asserted that AI is now a significant advantage for software companies, with about half of his portfolio's new revenue coming from “AI revenue” or “agentic revenue.” This declaration comes after the iShares Expanded Tech-Software ETF rallied 21% in May, its best month since October 2001.
The initial panic, which wiped approximately $285 billion off software, financial, and asset-management stocks in just 48 hours, stemmed from fears that AI agents could drastically reduce the number of human “seats” on which subscription software is priced. Salesforce saw a roughly 30% decline and SAP lost about a third of its market value during this period. The market shifted from viewing AI as a helper to a potential replacement for software companies.
However, not everyone agrees the SaaSpocalypse is entirely finished. Sridhar Ramaswamy, CEO of Snowflake, emphasized the need for continued vigilance, noting that the cost of running AI agents could be a future challenge, with companies like Uber and Microsoft reportedly scaling back AI agent usage due to high expenses. While the share-price panic may be over, a more profound re-pricing is occurring, favoring companies with strong AI defensibility and proprietary data, while discounting those easily replaceable by agents. For instance, HubSpot is down about 46% and Monday.com around 45% this year, despite good revenue growth, as the market values AI-related capabilities.
The recovery is characterized by a bifurcation, with infrastructure and consumption-priced businesses benefiting significantly. DigitalOcean is up over 220% this year, Datadog around 76%, and CrowdStrike over 50%. While Bravo claims the bottom has been called, he acknowledges unresolved questions regarding governance, cybersecurity, and returns on agentic tools, suggesting a period of discovery that continues to pressure the system. Other analysts also note that while fears have subsided, AI is accelerating a shift from seat-based to consumption-based pricing models, benefiting IT firms with strong partnerships with SaaS providers.
