March 11, 2026: Software Companies May Have to Rewrite Their Future

Recent sharp declines in software stocks have inspired dramatic labels such as “SaaSpocalypse” and “SaaSmageddon.” Reminiscent of the recent “DeepSeek” episode for AI stocks, software companies are now being challenged for their assumed invincibility. The SaaS model—where companies deliver, scale, and maintain software over the cloud—has historically commanded premium valuations due to the highly visible, recurring nature of revenues.

Advances in generative AI, however, are raising questions about barriers to entry. AI tools, including those launched by companies such as Anthropic, are shrinking the bridge from idea to execution for new entrants. As software engineering becomes more automated, startups may be able to build competing products faster and with fewer resources, challenging the moats of established software companies and pressuring valuations.

The slowdown in software was already taking shape even before the latest AI developments. Seat growth—a leading indicator of revenue—had begun to moderate alongside hiring trends across the industry. Skepticism toward the sector is therefore understandable.

Still, the market’s blanket negative reaction may be a stretch. Choosing enterprise software involves reliability, customization, security, compliance, and integration—factors that make switching providers slow and risky for large organizations. Consistent with that view, earnings estimates for many software companies have continued to rise despite the sharp drawdown in their stocks. The current environment may create opportunities for companies that successfully evolve alongside AI.

Weekly Market Update: March 11, 2026