Rise of AI means companies could pass on SaaS

Software stocks have taken a beating over the last month as investors grow concerned that AI could put vertical SaaS vendors out of business.

The downturn is remarkable for analysts in the tech sector who have seen top SaaS companies grow revenues by 20% or more each year, year after year.

“I think that investors are uncertain about SaaS stocks and how they create value,” Lisa Lawson, analyst with Omedia told The Register. “SaaS has been so lucky in that they’ve experienced double-digit [revenue] growth for a very long time. Like pretty impressive double-digit growth for a long time. Now that growth isn’t just based on how they can be more efficient. It’s that they have new competition in the form of OpenAI and Anthropic. So yes. Investors are concerned about how SaaS can continue to grow, and prove its value and price points.”

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