The SaaS apocalypse arrives? After meeting with 40 companies, Goldman Sachs proclaims: This could be a bigger growth narrative.

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Amid the wave of AI disruption, the "SaaS doomsday theory" is encountering Wall Street's strongest systemic rebuttal to date.

After intensively visiting around 40 software companies, Goldman Sachs analyst Gabriela Borges and her team released a deep-dive report, clearly asserting: AI in the SaaS industry is not a zero-sum game, but is expected to significantly expand its addressable market size. The "death narrative" for software companies has been grossly overstated.

The report points out that software companies are shifting their business models from selling features and seats to selling "units of labor or productivity," meaning they are tapping into labor budget markets far larger than traditional software budgets, thus substantially increasing their total addressable market (TAM). Meanwhile, value is being redistributed from cutting-edge large model labs to the software application and runtime layer. This structural shift positively supports the long-term valuation logic of SaaS stocks.

However, current market sentiment has not unilaterally reversed. JPMorgan trader Brian Heavy recently pointed out that the latest eight-session rally in software stocks "is largely tactical," essentially driven by short-covering rather than fundamentals; the weak performance guidance from ServiceNow subsequently delivered another blow to the stock and dragged down the sector, swiftly extinguishing the early recovery signals. The debate around the life and death of SaaS is reaching a critical juncture under the dual pressures of earnings season and AI benchmarking.

AI is a TAM Expander, Not a Value Destroyer

The core logic of the Goldman Sachs report is that AI and SaaS are not zero-sum.

Traditional SaaS charges by "seat," while AI is pushing software companies to reprice with "units of labor" or "productivity processes," enabling penetration into labor cost pools much larger than software IT budgets—signaling a quantum leap in addressable market scale.

At the same time, the focus of the value chain is shifting.

As the frontier large model benchmarking continues to improve and inference costs rapidly fall, value is transitioning from advanced labs to the software/application/runtime layer.

Borges notes that enterprises are actively building "model-provider-independent" standalone software ecosystems, prioritizing open source distilled models or proprietary small language models (SLMs) to avoid overreliance on a single model provider. The benefits are: more efficient request routing, lower inference costs, and mitigation of sudden price swings should a model provider stop subsidizing tokens.

The report also stresses that scarcity of computing power has become a new key constraint, tipping the balance of power toward those with inference-time capability—that is, software layers mastering agent orchestration, routing, and cost control.

AI Native Companies Take a Different Path, Filling Gaps Left by Traditional SaaS

Regarding competitive landscape, Goldman Sachs highlights that AI-native startups have not chosen to directly confront SaaS giants like Salesforce or Workday, but instead target "white spaces" between traditional SaaS products.

These white spaces refer to business processes and workflow scenarios in verticals not effectively covered by traditional SaaS. With flexible architectures and process-centered product design, AI-native companies are establishing footholds in these areas, rather than competing for the same pie as established players.

This competitive dynamic means AI Natives, legacy SaaS companies, and frontier model providers each have strengths and weaknesses on the software application layer, forming an "additive effect" rather than a cannibalistic one.

Disagreements Remain: Bearish Narrative Not Out Yet

From the surveyed listed companies, Goldman Sachs highlighted five they believe hold structural advantages:

CRM (Salesforce): Its agent strategy is clearer, and upcoming developer tools are worth attention;

CRWD (CrowdStrike): Multiple module demand has notably improved;

GWRE (Guidewire): AI is accelerating its cloud transformation, a pure incremental market expansion logic;

IOT (Samsara): Demand is ROI-driven, with differentiated data and AI capabilities;

RBRK (Rubrik): Agent Cloud and identity security business are broadening the growth narrative, with enterprise resilience needs continuing to expand.

Disagreements Remain: Bearish Narrative Not Out Yet

Despite Goldman Sachs's clear stance, internal market disagreements persist. The software application layer currently faces competitive shock from two new sources—AI-native companies and cutting-edge model providers. Goldman Sachs themselves admit that the key question is which group can most effectively overcome their own shortcomings.

The report’s answer is "an additive game" not zero-sum: each side continues to create customer value in their respective domains, so the overall software market benefits rather than shrinks. Whether this assertion will be confirmed by upcoming corporate earnings remains to be seen.

Current signals show ServiceNow's downgraded guidance reminds investors that uncertainty during the AI transition is still real. Brian Heavy’s commentary reminds the market: long-term capital’s reallocation to the software sector remains limited, and without sustained fundamental verification, the durability of this rebound will continue to be questioned.

Risk Disclaimer and Disclaimer ClauseThe market has risks, investment requires caution. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their specific circumstances. Invest at your own risk. ```