'SaaSpocalypse' Debate Intensifies as Software Stocks Careen

The 'SaaSpocalypse' debate intensified this week as software stocks swung sharply. A low-priced acquisition of a former highflier and a string of earnings-driven slumps deepened concerns that AI is eating into the value of costly software products.

Italian buyout firm Bending Spoons agreed to buy workflow management startup Airtable for less than $1.3 billion, a steep fall from Airtable's nearly $12 billion valuation at its 2021 peak. Bending Spoons, which went public in July and owns brands including AOL, Evernote and Vimeo, now has a market cap of $28 billion.

HubSpot posted its worst market day in a decade, sliding 19% and bringing its loss over the past year to more than 50%. Datadog also tumbled 19% on Thursday, its steepest drop since its 2019 IPO, and said its biggest AI client, believed by analysts to be OpenAI, has cut usage since June. Figma also fell on its earnings report. RBC analyst Matt Hedberg said companies will likely keep using coding agents to build functionality, which could put pressure on software renewals.

By Friday, the mood had brightened. Twilio and Atlassian jumped more than 20% after reporting quarterly results, and Cloudflare rose 5.6%. Atlassian delivered its most profitable quarter since 2021, leading Box CEO Aaron Levie to say on X that the idea that AI agents would be bad for certain software categories was a misplaced thesis. The report came five months after Atlassian cut 10% of its workforce, or 1,600 jobs, to self-fund AI and enterprise investments. Atlassian's stock surged 35% on Friday, its best day since its 2015 IPO, though it remains down 8% this year after losing one-third of its value in 2025.

Salesforce has lost more than 40% of its value since the end of 2024 despite accelerating revenue growth and consistent margins. CEO Marc Benioff has spent months arguing that the company's software won't be "vibe-coded away." The broader worry is that tools like OpenAI's Codex and Anthropic's Claude Code could slowly hollow out software economics.

The iShares Expanded Tech-Software Sector ETF fell 24% in the first quarter, its worst showing since 2008, before rebounding sharply. It is now down just 3% for the year, while the Nasdaq is up 15%. There have been no notable SaaS IPOs this year, and PitchBook data shows 86% of private deal value in the first half of 2026 went to AI companies.

Hedberg said sentiment was so bad in the first quarter that clients didn't even want to meet with software companies. RBC's Rishi Jaluria, who does not cover Atlassian, said part of Friday's surge likely came from short covering, adding that any proof a company isn't dead can trigger a short squeeze.

Source: CNBC