Jared Sleeper
Partner & Head of Software at Avenir, Startup Investing
Braze is an AI winner the market is pricing like a loser: organic growth is accelerating, yet it trades at about 2.5 times forward sales. Revenue grew 24% year over year, another quarter of acceleration, with net retention up, bookings up 50%, and AI products generally available ahead of schedule. The bar for a public SaaS company to count as an AI winner is very high right now, but Braze is delivering the revenue acceleration the market says it wants. x.com x.comÂ
Zeta Global's contracted revenue gives growth more visibility. RPO expected to be recognized within 12 months reached $218.7M, up from $71.3M in Q3 2025. Management makes a compelling comparison with Salesforce's $5.66B Braze deal: Zeta has about twice Braze's forward revenue, higher guided FY26 free cash flow than Braze's FY26 actual, and a lower revenue multiple. That gap alone does not prove Zeta is undervalued; management sees a chance to win customers during integration. x.com x.comÂ
Salesforce's proposed Braze acquisition opens another avenue for growth. The $5.7 billion all-cash price raises questions, though quality growth companies command a premium; whether this deal proves worthwhile remains to be seen. Closing is subject to Braze shareholder and regulatory approvals. x.comÂ
Braze's premium looks unjustified at 7x EV/sales against 20% year-over-year revenue growth. It is a great company with a great product, but that does not make the stock worth the premium. x.com x.comÂ
Zeta Global can reach $30 by early 2027 because strong, improving fundamentals at a compressed valuation can re-rate meaningfully. It is growing 23% organically with a clear path to acceleration through 2026 and is driving toward roughly $240 million of free cash flow while strengthening its balance sheet. Yet it trades at about 18x forward free cash flow and a sub-1x PEG, levels that already price in a lot of AI fears while sentiment stays stacked against SaaS. x.comÂ
ServiceNow is priced as if AI agents will replace it, yet its numbers show AI becoming its biggest growth driver. Q2 revenue grew 24% to $3.9B, faster than last quarter, earnings beat by almost 5% and full-year guidance rose for the second time. Its AI products crossed $1B in annual contract value, renewals were 98%, and $1M+ deals rose 40% to 123. AI infrastructure costs have squeezed margins slightly, and AI shrinking software budgets over 5-10 years is a fair bear risk. x.comÂ
Zeta Global looks cheap at about 2.9x forward sales while guiding 36-37% revenue growth, and could re-rate if seen as enterprise AI software rather than messy adtech. Q1 revenue rose 50% to $396M, and a Palantir partnership to rebuild its Data Cloud on Foundry could add over $100M of annual revenue in coming years. A July 6 Citi talk on its AI strategy is a near-term catalyst; 4.5x sales implies about $32. Risks include privacy issues, thin GAAP profit and customer concentration. x.comÂ
Atlassian got too cheap at 2x next-12-month revenue going into earnings and could re-rate to 4-5x, even after a 24% jump that still leaves it 85% below its highs. AI may pressure such companies, but that isn't showing up yet, and the market may be wrong that they won't adapt; some will get stronger by integrating AI. After $114, $139, the February 2025 VWAP and about 5x forward revenue, is a reasonable target. x.com x.comÂ
AI is becoming a cash-generation tailwind for SaaS companies, as Snowflake shows. Falling token prices let them add AI for minimal or controlled spending, producing packaged services with controlled margins and rising revenue, a recipe for more cash and shareholder returns, which is what the market now rewards. Hardware names like TSMC and NVIDIA already fit that profile, while Alphabet, Microsoft and Meta are slowing cash generation and planning to raise share counts. x.comÂ
Snowflake doesn't deserve to be caught in the SaaS selloff because AI is accelerating its business rather than disrupting it. CEO Sridhar Ramaswamy says Cortex Code, its data coding agent launched nine weeks ago, is already used by 50% of customers, making it the fastest-adopted product Snowflake has launched. Early adopters increased their Snowflake consumption by 11% on average. x.comÂ
Software stocks probably have a floor as results challenge fears that AI agents will displace them. Since the June 22 momentum unwind, IGV is up 25% and the SOX index down 22%. Atlassian and Salesforce jumped on solid results, plus an Anthropic deal for Salesforce, and possible Silver Lake interest lifted Workday. A new bullish twist says agents will use software tools 10-100x more than humans. Whether fundamentals back the rally is still open; a likely Fed hike and weak September are risks. … Show more
