"We think several factors are behind the slump in software / SaaS stocks in recent weeks, but we would also say that these forces have been pressuring the software industry for a while and are now accelerating. These include pent-up fear around AI disruption, outdated pricing models, general macro uncertainty, as well as concerns around AI-based valuation frameworks and valuation premiums."
"Can you boil this threat down to a simple idea that non-technical people can understand? AI won't eliminate the need for software companies, but software companies will need to prove that they can deliver on their growth agenda. Software companies will need to learn how to navigate the new era of fundamentally different business economics. AI is forcing change across"
Generative AI is lowering barriers to entry for new competitors and disrupting incumbent workflows, undermining growth-driven valuation premiums for enterprise software and SaaS companies. Pent-up fear about AI disruption, outdated pricing models, macroeconomic uncertainty, and concerns about AI-focused valuation frameworks are compressing multiples and amplifying stock weakness. Emerging AI tools reduce product differentiation, challenge revenue growth assumptions, and alter expected margins. Software companies must prove they can deliver sustainable growth while adapting pricing, packaging, and go-to-market strategies to fundamentally different business economics. Companies that integrate AI, realign pricing, and defend customer value will better preserve valuation and market position.
Read at Business Insider
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