Software Stocks Rally as 'AI Will Kill SaaS' Narrative Loses Steam

For much of the past year, investors worried that AI tools would let companies build their own software instead of paying for subscription services, threatening the entire SaaS (software-as-a-service) business model. That fear is now fading. A round of recent software earnings beat expectations broadly enough that one widely read take this week argued the panic was 'nonsense' and named three software stocks worth buying on the reversal. A separate analysis went further, arguing the software sector's rebound has been 'epic' and has room to keep running through October if the current earnings trend holds. The shift matters because SaaS stocks had been trading at depressed multiples for months on the assumption that AI would erode their recurring-revenue moats; a reversal in that view could unlock a re-rating across the group rather than a one-time bounce. What remains unresolved is whether this is a durable change in how investors price AI disruption risk, or a short-term relief rally built on one strong earnings season. The next batch of software earnings, not yet reported, will be the real test of whether the subscription model is holding up against AI competition or merely delaying the reckoning.