Dear Reader,
This is Simmy Adelman with Behind the Markets.
Happy Tuesday. Today is Tuesday, June 2nd.
I’m stepping in for Dylan this week, as he will be out of the office for the next couple of days.
Today I want to talk about something Dylan and I have spent a lot of time discussing around the office this past month.
The SaaSpocalypse.
What Is the SaaSpocalypse?
Dylan’s spoken about it here a couple of times, but here’s a brief recap for those unfamiliar.
The SaaSpocalypse is the fear that AI is going to destroy the entire Software-as-a-Service industry.
The argument goes like this: AI can now write code, analyze data, manage workflows, and automate processes — all the things that SaaS companies charge expensive subscription fees to do.
So why would any company keep paying for those subscriptions when AI can do the same job cheaper?
I mean, at Behind the Markets, it’s incredible to see what we’ve been able to accomplish with the use of AI.
I can’t imagine going back to a world without it.
So, it's a reasonable argument.
And Wall Street ran with it.
In April 2026, some of the biggest and most dominant software companies in the world got absolutely crushed.
ServiceNow fell to $81 a share.
Salesforce hit $163.
Workday dropped to $110.
The iShares Software ETF cratered more than 24% in a single quarter — its worst quarter since 2008.
Wall Street had essentially declared the entire sector dead.
Here's the Problem With That Argument
The businesses kept growing.
That's the part nobody was paying attention to.
While the stocks were getting hammered, the actual companies were posting numbers that would make most industries blush.
ServiceNow grew subscription revenue 21% year over year.
Their AI product — Now Assist — doubled its annual contract value in a single year.
Salesforce generated $16 billion in free cash flow — more than Adobe, ServiceNow, and Workday combined.
Their AI platform, Agentforce, grew its annual recurring revenue 200% year over year.
Workday kept its customer retention rate at 97% while growing revenue 13% to 14%.
Think about that.
97% of their customers stayed.
The Smartest Companies Didn't Get Replaced. They Adapted.
Here is what I think people missed.
The SaaSpocalypse is real — but it's real for the second and third tier.
The weak players, the companies that were already losing competitive ground, the ones charging for things AI can now do faster and cheaper — those are the ones in trouble.
But companies like Salesforce, ServiceNow, and Workday?
These are not weak players.
These are dominant franchises with massive customer bases, deeply embedded workflows, and the resources to absorb AI into their own products and come out stronger.
And that is exactly what they did.
Salesforce built Agentforce.
ServiceNow built Now Assist.
Workday rebranded itself as an enterprise AI platform.
They didn't get replaced by AI. They became AI companies.
The Numbers That Put the Final Nail in the Coffin
Now look at Datadog and Snowflake.
These are two companies right in the crosshairs of the SaaSpocalypse thesis — data monitoring and cloud analytics, exactly the kinds of things people said AI would make obsolete.
Datadog hit a low of $98 a share.
It is now trading at $247.
Up 152% from its low.
Their first quarter revenue just hit $1 billion for the first time ever — up 32% year over year.
Snowflake hit a low of $118.
It is now trading at $255.
Up 116% from its low.
Their first quarter revenue grew 34% year over year — beating guidance by 700 basis points.
On May 28th, Snowflake had its single best trading day in company history, surging 36% in one session.
And CNBC summed it up perfectly a few days ago:
"Software stocks wrap up best month since 2001 as talk of 'SaaSpocalypse' subsides."
The Pattern
Here is the pattern I keep seeing, and it goes back decades.
Every time a transformative new technology comes along, Wall Street panics and declares entire industries dead.
The internet was going to kill retail.
Mobile was going to kill the internet companies.
The cloud was going to kill enterprise software.
And now AI is going to kill SaaS.
And every time, the dominant players in those industries figure out how to absorb the new technology and come out stronger.
The weak ones don't survive.
But the strong ones always find a way.
Where Things Stand Now
ServiceNow is up 68% from its April low.
Salesforce is up 22%.
Workday is up 34%.
Datadog is up 152%.
Snowflake is up 116%.
These stocks are telling you something.
The businesses never stopped growing.
The fears were real, but for many of the dominant players, they were significantly overblown.
The SaaSpocalypse claimed some victims… and over time, it will likely claim many more.
But the strongest companies recovered, and if you ask me, there’s a lot more room left to grow.
Anyway, that's all I have for you today.
All the best,
Simmy Adelman, Editor-in-Chief
Behind the Markets
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Written by Simcha Adelman