The markets have left SaaS for dead. SaaS companies are selling for 40% less than usual. I see a major opportunity here.

SaaS stocks have fallen steadily over the last year. Their average revenue multiple is down to 4.8, according to the SaaS Capital Index. That’s almost 40% below the long-term average of around 8x.
Markets are betting that AI will kill SaaS.
It’s easier to build software than ever with tools like Claude Code. Will companies just build their own?
My bet is that SaaS isn’t going anywhere. Here’s why…
Note: This is not investment advice.
Corporations Are Snails
Have the folks betting against SaaS ever actually worked at a big company?
Everything they do is at a snail’s pace.
Most companies struggle to even install SharePoint. Over 15 years into cloud computing, many companies still rack their own servers.
And that’s in America! I’m told it’s even worse in Europe.
Old school companies that sell insurance or cardboard boxes are suddenly going to become Claude Code wizards? Not a chance.
Time Is Money
Even if a company could build their own software, it’s probably not worth their time.
Say you’re a high-performing company like a top hedge fund. It makes more sense to buy a SaaS subscription than to spend your valuable time vibecoding a CRM.
You want to do your business, not build tools you can easily buy.
Free markets tend toward the most efficient outcome. The most efficient outcome is one focus builder creating a product for everyone to use, not thousands of companies all creating the same thing.
Competition Heats Up
SaaS isn’t going anywhere, but some SaaS companies are.
If you see a public SaaS company that hasn’t released a meaningful AI product yet, they’re toast. They’re going to be eaten alive by hungry startups.
Every day, I see 20 startups going after the same legacy SaaS company. The big boys have an advantage: they have all the customers and all of the money.
If they can release some solid AI tools, the big companies will hold their position. But the slowest SaaS companies will be killed by startups.
Stop Losing So Much Money — The Lesson of Figma
Many SaaS companies have no spending discipline. In a down market, their stocks are getting crushed.
If you’re not profitable, your growth is modest, and your losses are massive, why would anyone want to own your stock? They could own Google or NVIDIA, companies that are printing money and winning AI.
Let’s look at Figma, a former SaaS darling that’s gotten crushed since its IPO.

Figma is down 84% since it went public last August. When you look at the financials, it’s not hard to see why.
In 2024, Figma lost $732 million. The following year, Figma increased its annual revenue by $220 million. That’s a burn multiple of 3.3.
That’s fine for an early-stage startup. But for a public company, that’s garbage.
Figma is incinerating money. And it’s not growing enough to justify that spending.
Where Are the Bargains?
If you see a SaaS company with a low burn multiple and strong growth, that could be a buy at today’s prices. And if it’s profitable, even better!
In addition to strong financials, I want to see them taking advantage of AI. If they’ve got product velocity, a solid P&L, and you can pick up the stock for below the average 8x revenue multiple, you could have a winner.
One good example is Workday.

It’s trading at under 5x sales with 10% YoY revenue growth. And unlike a lot of SaaS names, it’s profitable.
Workday has released some well-reviewed AI features, including a contract analysis tool. Workday also has deep relationships with tons of enterprises. They’re not going to rip it out anytime soon.
Wrap-Up
Markets are pricing in a future where everybody cancels their SaaS subscriptions and builds their own software. This is never going to happen.
At the margin, a few technically sophisticated companies will build their own. But for your average Fortune 500, Claude Coding up a CRM is out of the question.
They’ll use a product that is made more effective with AI. That product will probably come from their existing vendor.
SaaS trading at a 40% discount is a huge opportunity. But beware those companies with giant losses and no product velocity. They’re the casualties of the AI wars.
Do you think SaaS will survive?
Note: This is not investment advice.
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