The 'SaaSpocalypse,' a term that gained traction amidst fears of AI rendering software businesses obsolete, is largely considered to be over. This period saw approximately $2 trillion in software value wiped out due to concerns that AI would disrupt the software as a service (SaaS) sector. However, the initial bearish thesis has evolved, with companies like Salesforce, Booking, and IBM demonstrating robust performance through AI integration.
While some software companies experienced significant downturns, such as Airtable being acquired for about one-tenth of its peak valuation and HubSpot and Datadog seeing drops after earnings, other companies like Atlassian, Twilio, and Cloudflare reported strong results, with Atlassian's stock surging 35%. Analyst Matt Hedberg noted that while coding agents might pressure renewals, the industry still holds significant value.
Salesforce CEO Marc Benioff has been actively assuring investors about the resilience of his company's offerings, despite a more than 40% value loss since late 2024. The iShares Expanded Tech-Software Sector ETF, after plummeting 24% in the first quarter, has since rebounded, indicating renewed confidence in the sector. Thoma Bravo, a private equity firm, states that many of its software portfolio companies are benefiting from AI adoption, with roughly half of new revenue coming from AI and agentic offerings.
