SaaS: Answering concerns about AI impact

Stocks of software-as-a-service (SaaS) companies have recovered from February lows, but they are far from unscathed.

As of last Friday’s close, two leading SaaS stocks, Salesforce and ServiceNow, were still down more than 25% since the beginning of the year, and accounting SaaS company Intuit was down 31%.

The culprit is a narrative known as the “SaaSpocalypse,” or the belief that agent-based AI will make SaaS platforms obsolete.

In February 2026, Anthropic launched Claude Cowork, triggering a massive stock price drop in the space. The fear was that autonomous AI agents capable of handling complex specialized tasks, from contract reviews to financial analysis, would encroach on the space of established SaaS platforms.

The panic worsened when Anthropic revealed it had raised US$30 billion in a new funding round, valuing the company at US$380 billion. The company’s revenue soared from zero to US$14 billion at an annual run rate, growing 10x for three consecutive years.

It’s a compelling story. But there is a difference. While February’s economic downturn was driven by fear of the unknown, today SaaS companies are reporting results and tackling market fears head-on.

In other words, we have some answers.

Fear #1: Vibe coding opens the floodgates

The first concern is that AI coding agents will make it easier to build software and flood the market with cheaper alternatives to established SaaS platforms. The problem with this logic is that technology wasn’t the only barrier to SaaS adoption.

Intuit CEO Sasan Goodarzi drew a line between “context” and “core” and laid out a useful framework during the company’s latest earnings call.

Core refers to Intuit’s proprietary data, domain-specific AI models, and human expertise. Context is where external large language models (LLMs) like Claude and ChatGPT handle the long tail of industry-specific needs, such as a construction company building custom dashboards within Intuit’s enterprise platform.

Key insights include: Intuit does not compete with LLM providers. The company partners with them and, importantly, maintains 100% of the economics.

Veeva Systems, a SaaS company focused on the life sciences and pharmaceutical industries, has a similar story. The company’s CEO, Peter Gassner, made it clear that LLM providers are infrastructure, not competitors, similar to Amazon Web Services (AWS) in the first generation of cloud software.

Veeva’s AI agents are built using Anthropic and Amazon’s LLM and hosted on Amazon Bedrock. It’s not the underlying technology that makes them valuable. Instead, compliance-grade, domain-specific intelligence is layered on top.

ServiceNow CEO Bill McDermott put it more bluntly: “AI is probabilistic, meaning its outcomes are inherently uncertain.” Enterprise workflow orchestration is deterministic, predictable, and controlled.

In other words, AI will not replace enterprise orchestration. Instead, AI relies on it.

Here are the details: Rather than competing with ServiceNow, Anthropic partners with ServiceNow to help customers build AI applications on ServiceNow’s platform.

In other words, the cord is cheap. But trust is not.

Fear #2: SaaS companies will become stupid databases

A second concern is that AI will take over the customer-facing layer, reducing SaaS platforms to basic databases where information is created, read, updated, and deleted. Nothing more.

Intuit’s recent results suggest the opposite is happening. Over 3 million customers use AI agents and repeat engagement is over 85%.

Why is the repeat usage rate so high? Here’s a hint. Intuit’s corporate tax professionals reveal an average incremental tax credit of more than $1,000 per customer. That’s a real savings for the customer.

No wonder customers are much more willing to pay when AI and human intelligence are delivered together. That means AI makes the platform more stable and more valuable. Furthermore, AI agents are increasing the demand for human assistance, not decreasing it.

QuickBooks Live, which offers live support, saw customer growth of over 50% in its most recent quarter. Additionally, these users are also 22 points more likely to be connected to the ecosystem, meaning they consume more of Intuit’s services overall.

The benefits of ServiceNow further explain this. Its configuration management database is essentially a detailed blueprint of how each customer’s company operates: who does what, which systems communicate with each other, and how tasks flow from start to finish. These blueprints took years to build and are tailored to each customer’s needs.

AI agents cannot understand how a company works on their own. They need maps already built by incumbents. In an AI-powered world, systems of record are becoming more important, not less.

Concern #3: Seat compression destroys SaaS economics

The third concern goes to the core. If AI agents handle most of the work, companies will need fewer human users and therefore fewer seats to pay. This is a problem for SaaS business models that charge based on the number of users.

Salesforce’s latest results provide the most direct rebuttal. The company reported that three monetization paths are in play in parallel: upgrading existing customers to an AI-powered premium tier, expanding seat capacity (seven of the top 10 deals included new seat additions), and selling consumption-based flex credits for customer-facing agent use cases.

Meanwhile, the company’s flagship AI product, Agentforce, grew from zero to $800 million in annual recurring revenue and closed more than 29,000 deals in 15 months.

ServiceNow’s numbers bear this out. CEO Bill McDermott emphasized that the company’s addressable market has an estimated 1.3 billion seats, and its active user base has grown 25% year-over-year in the most recent quarter, barely hurting.

Intuit is also expanding. The accounting software company’s mid-market solutions grew about 40% year-over-year. In addition, the company aims to expand its direct sales team by about 30%, which is not the move of a company enduring customer attrition.

For now, sheet compression remains a theoretical risk rather than a real one.

Be smart: go back to basics

Does the above answer mean the coast is clean? Not so fast. The story of SaaSpocalypse contains a kernel of truth. AI will continue to reshape the software industry.

Some SaaS companies will not survive this transition. But there’s something investors shouldn’t overlook. Moving forward requires SaaS companies to return to their roots.

What made SaaS superior to traditional licensing models in the first place was the simple but powerful idea of ​​aligning a company’s revenue from a transactional relationship with the needs of its customers. You pay only for what you use, and the software earns you that income every month.

Its placement has not changed. Rather, the AI ​​will retest the relationship.

SaaS companies that thrive are those that use AI to solve real customer pain points, like figuring out tax credits, speeding drug approvals, and automating IT workflows, rather than trying to shoehorn technology into areas where it doesn’t belong.

Data from ServiceNow, Salesforce, Intuit, and Veeva shows that the best incumbents are already doing just that.

The horror of SaaSpocalypse isn’t over yet. But real changes are likely to become apparent over years, not weeks.

I own stock in Intuit, Salesforce, ServiceNow, and Veeva Systems. he is a co-founder of smart investora website dedicated to helping people invest wisely by providing investor education, stock commentary, and market coverage.