Tyler Technologies trades at 34x GAAP EBIT, not inexpensive for roughly 10% aggregate growth, and AI is unlikely to change its story in the next few years. Its view of AI is the most muted of any public SaaS company, perhaps rightly given slow government buyers and its ongoing cloud transition; management calls AI a tailwind, not a big one. Long run, AI could make copying its software cheaper and pressure pricing, while cautious local governments and brutal go-to-market give it time to respond. … Show more

Zeta Global sells into an extremely competitive marketing-software space, and AI tools like Claude layered on top make it worse. Vendors like Zeta and Mixpanel used to compete hard just to win product-launch business, user acquisition costs are high, and a graveyard of better enterprise SaaS sits in private markets, unable to exit on slow growth and low margins. Others cite Zeta's 50% growth and 120% net revenue retention, but buying software here is trying to be too clever. x.com  x.com  x.com  … Show more

Workday at 3x sales is a travesty for a business of its quality, implying the market expects management to destroy value through poor capital allocation on top of AI fears. It could likely raise margins toward 30% without much customer impact, given bloat and complacency; the same factors that make it easy to catch up also make it easy to run more profitably. Venture valuations like Rippling's make more sense with Workday at 6-8x sales. x.com  x.com  x.com 

The 'SaaSpocalypse' narrative is wrong because AI makes replacing enterprise software more expensive, not cheaper, leaving beaten-down SaaS stocks at once-in-a-lifetime entry levels. Replicating ServiceNow would take some 40,000 engineers to match 20 years of code, and even AI coding would raise costs, since tokens are not free and model labs lack the capacity to be enterprises' database layer. LLMs are pattern recognizers that can fail catastrophically on new problems. x.com  x.com 

UiPath may carry the highest business-model risk of any SaaS company because LLM agents with computer use compete directly with its robotic process automation. Rivals include Anthropic and OpenAI themselves. Its base is sticky for now, with 97% gross retention, regulated large-enterprise customers and long contracts, giving it time to sell AI tools. Still, it would be very surprising if gross retention stays in the high 90s, and the 2x EV/ARR multiple reflects the threat. x.com 

Pegasystems faces a clear-cut AI bear case because AI coding attacks the custom-software problem its low-code platform was built to solve. AI tools are especially good at code migration, so customers with legacy apps stuck on Pega could cheaply move off. CX startups like Sierra and Decagon and AI-plus-engineering firms compete for parts of its business, and no AI traction is disclosed. Sticky, slow-moving, regulated customers may give it time to adjust, as it did from on-prem to cloud. x.com  … Show more

Microsoft faces AI disruption that could erode its software moat and compress its high multiple. Chris Hohn, the best stock picker ever and not one to move lightly, cut Microsoft from 10% to 1% of his portfolio, about $8 billion, citing AI disruption. The question that matters is whether a business can be disrupted: when code becomes a commodity the moat erodes, and multiple compression from a high base does severe damage. x.com 

Salesforce looks vulnerable long term because users hate it and will happily switch to alternatives, while in the AI era users actually liking a product will be a key moat for SaaS stocks. Adobe showed this when users who hated it switched more easily to Figma. Present-day fundamentals look great across these companies, so the threat is still theoretical. x.com 

SaaS will have its time in the sun again, and now, while it is still hated, is the time to pick favorites and build positions. Bearish sector narratives don't last forever, and the view that all SaaS is being disrupted should ease somewhat this summer, though multiples may not return to prior levels. Some SaaS names have little moat against Anthropic and peers, but many, especially cybersecurity and Palantir, are strengthened by the agentic push. x.com  x.com  x.com