The “SaaSpocalypse” is over, and AI now offers software companies an “enormous tailwind,” the founder and managing partner of private equity giant Thoma Bravo has said.
Software-as-a-Service stocks came under pressure in February, when Anthropic triggered a rapid sell-off by unveiling advanced AI tools for its Claude co-working agent, fueling investor fears of a “SaaSpocalypse” for the sector.
But Orlando Bravo, founder and managing partner of Thoma Bravo, told CNBC that saying investors are underestimating software companies’ ability to adapt.
He said the portfolio companies of his firm, one of the world’s largest private equity investors in software and technology-enabled services, which manages almost $200 billion in assets, generate around $35 billion in combined revenue and are, for the most part, “booming” because of AI.
Speaking with CNBC’s Annette Weisbach at the SuperReturn International private equity and venture capital conference in Berlin, Bravo said: “The SaaSpocalypse is over. It’s finished, no more.”
“People were assuming that software companies just do one thing and they stay still,” he said. “But software companies continue to evolve with infrastructure.”
Bravo added that software companies can move to a “completely new level” by automating certain aspects of human judgment and processes.
“Around 50% of our new revenue is AI revenue, agentic revenue,” he said, predicting that software companies and AI will “come together” in a “new agentic solution” for corporate customers in the next few years.
“AI is an enormous tailwind for software companies,” he added.
Software staged a post-SaaSpocalypse fightback
Since February, software stocks have staged a fightback. The iShares Expanded Tech-Software Sector ETF rallied 21% in May, its strongest monthly performance since October 2001, and has advanced more than 9% on a three-month basis.
In a wide-ranging interview, Bravo also said that high-growth areas, such as semiconductors, continue to offer an attractive low-entry environment for investors.
Bravo said that the market is in a period of adjustment. He said investors and companies are still working through questions around governance, cybersecurity and returns on investment from newer AI agentic tools.
“It is a period of discovery now, which creates pressure on the whole system,” he said.
