For much of the past year, the word "SaaSpocalypse" hung over the software sector like a storm cloud that refused to move on. The fear was understandable, based primarily on the assumption that artificial intelligence (AI) would render traditional software platforms obsolete, automating away the workflows that justified their subscription costs, and hollowing out the business models that had made SaaS investing so rewarding for so long. Few companies felt that fear more painfully than HubSpot Inc (NYSE: HUBS), which just a few weeks ago had shed around 80% from its all-time high and was back trading at 2019 levels.
But over the past fortnight, something has started to shift in the SaaS space, and it's gathering momentum. Shares of Snowflake Inc (NYSE: SNOW) are ripping higher after convincing investors in its earnings report last week that its AI positioning is a strength rather than a liability. ServiceNow Inc (NYSE: NOW), another big software name that was uninvestable for most of the past year, has gained nearly 50% since the middle of May for many of the same reasons.
