AI-driven ‘SaaSpocalypse’ erodes nearly half of software sector’s market value

A representative picture.The AI-driven SaaSpocalypse has made software providers lose nearly half their market cap from peaks earlier this decade, Bloomberg reported.The SaaSpocalypse refers to a market correction where artificial intelligence tools and autonomous AI agents are seen as threatening traditional Software-as-a-Service business models, eroding investor confidence across the sector.Figma CEO Dylan Field this month rejected nearly $46 million in stock awards, saying the grants would dilute shareholder value.The move echoed similar pledges from ServiceNow and Intuit, whose executive teams announced earlier this year that they would not sell their shares in the near term.As companies scramble to associate themselves with AI, Salesforce renamed many of its flagship products to include its AI tool label “Agentforce”.Sales Cloud, its flagship CRM product, is now known as "Agentforce Sales." Oracle similarly renamed its database the "Oracle AI Database" in late 2025.Some companies have reshuffled their top brass in response.

Adobe took the unusual step of publicly announcing a CEO search before deciding on a successor.Workday brought back cofounder Aneel Bhusri to lead the company just two years after he handed the role to a more sales-focused leader.C3.AI's Tom Siebel made a similar return in May, less than a year after stepping back from the CEO role.Rishi Jaluria, an analyst at RBC Capital Markets, said many executive teams are struggling to respond to the market pressure."We have no idea what to do," he said.Tyler Radke, an analyst at Citigroup, said some software stocks have begun to stabilise, showing early signs of revenue acceleration — including Palantir Technologies, Snowflake and Microsoft — though the rally is largely limited to infrastructure software rather than application makers.Radke advised that true recovery is about reinvention and building new businesses in the AI era.

"There's nothing you can do in terms of optics and cosmetics," he said.