If you run a SaaS company, you’ve been reading a lot of alarming things lately. AI will make your product irrelevant. The “SaaSpocalypse” is here. The era of software subscriptions is over. If even half of this is true, it changes what your company is worth, who will buy from you, and whether your team needs to look different a year from now.
Three quarters of our clients at Tunga are SaaS companies. So I went and looked at what is actually happening. Not the sentiment. The data.
Two sets of numbers
The crash numbers are real. On January 29, 2026 the S&P 500 Software Index dropped 8.7% in a single day. SAP lost over €40 billion in market value. In the first week of February, an estimated $285 billion was wiped out. The total correction is estimated at over $1 trillion.
But there is a second set of numbers. The global SaaS market grew to $408 billion in 2025 and is projected to hit $465 billion in 2026. Gartner forecasts software spending growing 15.2% this year. The average organisation’s SaaS spend is up 8% year over year.
Stock prices crashing while revenue keeps growing is not a contradiction. The market prices uncertainty about the future, not a collapse in the present.
Not all SaaS is equal
This is where it gets specific. The total market is growing, but underneath that growth, a selection is taking place. And the difference comes down to what your product actually does.
One type of SaaS company is essentially a database with an interface on top. It stores data, makes it accessible, and the value sits in the convenience of that interface. Simple CRMs, form builders, basic project management, standard dashboards. This type is becoming vulnerable. AI agents are increasingly capable of doing exactly that: storing, retrieving, and presenting data without needing a separate product for it.
Another type helps you execute. It manages complex workflows, carries responsibility for compliance or financial logic, and is deeply embedded in how an organisation actually runs. This type is not being replaced, because the cost of getting it wrong is too high. An AI that gives the right answer 6 out of 10 times is not usable for payroll or financial reporting.
Gartner puts a number on this: 35% of simple, single-purpose SaaS tools will be replaced by AI agents by 2030. That’s substantial. But it means 65% survives, likely in adapted form. IDC confirms: workflow automation and small-business SaaS are the most exposed. Platforms embedded in core business processes are not.
The model changes, the sector doesn’t
The per-seat pricing model is under pressure. When one person with AI support does the work of five, the link between licence count and value breaks. The share of SaaS companies using some form of usage-based pricing has risen from 27% in 2021 to somewhere between 38% and 61% today, depending on whether you count hybrid models. That is not a sector dying. That is a business model adapting.
And the AI tools that are supposedly replacing SaaS? They have their own challenges to figure out first. An analysis of 3,500 companies shows AI-native products have a median gross retention of just 40%, compared to around 90% for traditional B2B SaaS. Gross margins average 25% versus 75-80%. Much of what is currently counted as AI revenue appears to be companies experimenting with AI tools. There is no guarantee they’ll keep spending once the experiment phase is over.
Both sides of the market are in transition. But the idea that one is simply replacing the other doesn’t hold up in the data.
What this comes down to
The SaaS sector is not collapsing. The market is growing, spending is up, and companies that build something deeply embedded in how their clients operate have a strong position.
But a selection is happening. Not between SaaS and AI. Between SaaS products that do something hard to take over, and SaaS products that don’t.
That distinction is more useful than the headlines. Whether your product manages complexity, executes processes, or carries responsibility that can’t afford to be approximate: that’s what determines where you sit. And if the answer is yes, the coming years are more likely to bring opportunity than threat.
What remains genuinely uncertain is how fast this selection plays out, and how the shift in pricing models reshapes the economics along the way. That part of the story is still being written.
