Will designers design first in a world where AI can code software immediately, or just describe the design? Will large enterprises pay for premium observability when AI can migrate & monitor open source competitors?
As Michael Mauboussin writes, there’s information in price. These questions are priced in. It’s too early to see revenue erosion, but the market is pricing in the risk.
The median SaaS stock is down 14-17% year to date. 64% of software companies are down. Adobe has fallen 32%, HubSpot 57%, Atlassian 54%.
Revenue growth predicts returns better than margins, profitability, or market cap. Companies growing above 20% are up. Companies growing below 20% are down. Palantir grows 47%. MongoDB grows 21%. Adobe & Salesforce grow less than 10%.
This isn’t a broad market correction. Large caps are holding; small caps are collapsing.
Ten years ago, software crashed too. On February 5, 2016, LinkedIn fell 43% and Tableau dropped 49% in a single trading session. Salesforce lost 13%. The Nasdaq tumbled 3.25%. Investors dumped software in a single afternoon.
The crime was weak forward guidance. LinkedIn projected 20-22% growth when analysts expected 30%. Tableau’s license revenue growth decelerated from 57% to 31% quarter over quarter.
But the selloff reversed within weeks. Nasdaq finished 2016 up 7.5%. SaaS stocks climbed for five more years. No one doubted that enterprises would continue buying CRM software & analytics tools. The products remained essential. Only the price changed.
In 2016, investors questioned valuations. In 2026, they question relevance.