AI Won't Eat SaaS. AI-Enabled Teams Will Outrun Everyone Else.

The SaaS selloff isn't about AI rebuilding every product — it's a race between AI-enabled teams that automate their workflows and teams that keep using software the old way. Why workflow velocity, not tool access, decides the winners.

The SaaS software selloff has been steep.

At the time of writing, the S&P North American Expanded Technology Software Index is down roughly 22% year-to-date.

Names like Salesforce, ServiceNow, and Intuit have all taken significant hits.

The narrative driving it is simple: AI is going to eat SaaS.

I never quite understood what "eating SaaS" means, but regardless, I don't think that's quite right.

Yet I also think the selloff is justified.

AI changes the value of software by changing how teams work.

Companies will increasingly judge software by the work it eliminates, rather than simply the workflows it records.

The real divide will be between teams that integrate AI and automate their operations and teams that continue to use software in largely the same way they always have.

Stock prices reflect expectations around future earnings.

When the market marks down SaaS stocks 20%+, the implied message is that these companies face meaningfully higher execution risk than they did a year ago, lowering the expected level and durability of future earnings.

Prices are adjusting to reflect that.