‘SaaSpocalypse’ debate intensifies as software stocks swing wildly

The “SaaSpocalypse” was raging this week. Then it acquired a reprieve.

The pennies-on-the-dollar acquisition of one-time highflyer Airtable, adopted by plunges in HubSpot, Datadog and Figma on earnings studies, all served to underscore investor issues that synthetic intelligence fashions are consuming away on the worth of expensive software program merchandise.

“I do assume that firms are going to proceed to make use of these coding brokers to construct performance to perhaps act as a little bit little bit of stress on renewals,” mentioned Matt Hedberg, a software program analyst at RBC Capital Markets.

However by the tip of the week, Wall Avenue was reminded that there is nonetheless juice left in an trade that, not way back, was seen as driving innovation and was buying and selling at hefty market multiples.

Twilio, a supplier of cloud-based communications software program, and Atlassian, which sells collaboration instruments, every noticed pops of effectively over 20% on Friday after reporting quarterly outcomes. Cloudflare, which helps defend web sites from cyber assaults, gained 5.6%.

Box CEO Aaron Levie, who’s been evangelizing cloud software program since he began his file-sharing firm greater than twenty years in the past, was significantly impressed with Atlassian, which reported its most profitable quarter since 2021.

“Enormous Atlassian quarterly beat,” Levie wrote on X. “There was a misplaced thesis over the previous 6 months that one way or the other brokers could be unhealthy for sure software program classes. There’s undoubtedly reality on this in some areas, however many have been parsing this poorly.”

Levie’s response displays a degree of nuance that is not at all times obvious within the sell-it-all commerce. Salesforce CEO Marc Benioff has spent months trying to persuade buyers that his firm’s longstanding software program for gross sales, advertising and marketing and customer support will not be vibe-coded away. Salesforce has misplaced greater than 40% of its worth because the finish of 2024 regardless of accelerating income development and constant margins.

Salesforce and its software program friends have been under pressure, much less due to their present development charges and extra due to the more and more common view that instruments like OpenAI’s Codex and Anthropic’s Claude Code will slowly — after which quickly — hole out their economics.

The iShares Expanded Tech-Software program Sector ETF plummeted 24% within the first quarter, its worst efficiency since 2008. Nonetheless, it is since rebounded sharply and is now down simply 3% for the 12 months, whereas the Nasdaq is up 15%.

RBC’s Hedberg mentioned sentiment was so unhealthy within the first quarter that shoppers did not even need to talk about software program.

“Folks have been pencils down within the area,” he mentioned. “They simply did not really feel prefer it was value their time to fulfill with software program firms again then, and that was even high-quality firms.”

That perspective has develop into a giant drawback for venture-backed software program firms that raised cash at hefty valuations within the pre-AI period and are actually attempting to determine what’s subsequent for them. There have not been any notable SaaS IPOs this 12 months, and 86% of personal deal worth within the first half of 2026 went to AI firms, in response to PitchBook data.

Considerations have been amplified on Tuesday, when Italian software program buyout agency Bending Spoons mentioned it had agreed to purchase workflow administration startup Airtable for lower than $1.3 billion. At its peak in 2021, Airtable was valued at nearly $12 billion.

Bending Spoons, which held its own IPO in July, owns manufacturers together with AOL, Evernote and Vimeo, and now has a market cap of $28 billion.

Two days after the Airtable deal, HubSpot had its worst day available on the market in a decade, sliding 19% and bringing its loss for the previous 12 months to over 50%. Datadog, which sells monitoring software program, additionally sank 19% on Thursday, the steepest droop since its IPO in 2019. Nonetheless, the inventory has been an outperformer, climbing 72% this 12 months.

Datadog said its largest AI consumer, which analysts suspect is OpenAI, has minimize utilization since June.

“There’s these reminders that we’re not out of it,” Hedberg mentioned. “Every thing’s not easy crusing.”

The temper improved after the shut on Thursday, due to stronger studies from Atlassian, Twilio and Cloudflare. Atlassian CEO Mike Cannon-Brookes credited his firm’s analysis and improvement groups for working onerous to present clients “the highest quality at the most effective value and the most effective velocity.”

The report got here 5 months after Atlassian slashed 10% of its workforce, or 1,600 jobs, which Cannon-Brookes mentioned on the time was essential to “self-fund additional funding in AI and enterprise gross sales, whereas strengthening our monetary profile.”

Atlassian’s 35% surge on Friday marked its greatest day because the firm went public in 2015. It is nonetheless down 8% this 12 months after shedding one-third of its worth in 2025.

Rishi Jaluria, one other RBC analyst, mentioned a number of the pop for Atlassian is probably going attributable to quick protecting, which means that buyers who guess towards the inventory by borrowing shares and promoting them are actually shopping for them again.

“Everybody says Atlassian goes to get crushed by Claude Code and OpenAI Codex, and they also’re achieved,” mentioned Jaluria, who would not cowl the corporate. “Any proof level that claims, oh wait, this firm is not useless, goes to end in a brief squeeze.”

WATCH: We do not think AI will kill ‘SaaS’ but slow decay is bad enough: CLSA