Thoma Bravo declares SaaSpocalypse over as AI becomes tailwind for software industry

SaaSpocalypse Declared Finished by Major Software Investor

Orlando Bravo, founder of Thoma Bravo, one of the world's largest software-focused private equity firms managing nearly $200 billion in assets, has declared the SaaSpocalypse over 1

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. Speaking at the SuperReturn International conference in Berlin, Bravo told CNBC that the panic surrounding AI gutting the software industry has passed, calling AI "an enormous tailwind for software companies" 2

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. The term SaaSpocalypse emerged in February when Anthropic's Claude Cowork agent tools triggered a brutal selloff, wiping roughly $285 billion off software, financial, and asset-management stocks in a 48-hour window as investors feared AI agents could collapse the subscription seat model 1

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AI-Driven Products Fuel Revenue Growth

Bravo revealed that approximately half of the new revenue across Thoma Bravo's portfolio now comes from AI-related solutions and agentic revenue 1

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. The firm's portfolio includes software and tech-enabled services businesses generating about $35 billion in revenue 2

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. Bravo expects traditional enterprise software and AI tools to merge into what he describes as agentic solutions designed to automate decision-making and business workflows 2

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. He pushed back against assumptions that software companies remain static, arguing they continue to evolve with infrastructure shifts 2

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Uneven Recovery Across the Software Industry

While Bravo has market momentum supporting his optimism, the recovery in the software industry reveals a stark bifurcation. The iShares Expanded Tech-Software ETF rallied 21 percent in May, marking its best month since October 2001 1

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. Consumption-priced businesses and infrastructure providers have soared: DigitalOcean is up more than 220 percent this year, Datadog around 76 percent, and CrowdStrike over 50 percent 1

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. However, seat-based application software continues struggling. HubSpot is down roughly 46 percent on the year despite growing revenue more than 20 percent, while Monday.com has fallen around 45 percent 1

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. The market is paying a premium for AI-defensibility while discounting anything AI agents might plausibly replace.

Snowflake CEO Urges Caution Amid Rising Costs

Not everyone in the software industry shares Bravo's confidence. Snowflake chief executive Sridhar Ramaswamy refused to declare the SaaSpocalypse over, arguing it is "better to be paranoid" in a market where a rival's improvement can erase a lead overnight 1

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. His caution highlights emerging concerns about the economics of running AI agents. Uber capped its engineers' agentic-AI coding spend at $1,500 per month each after blowing through its 2026 budget, and Microsoft reportedly pulled back on Claude-powered agents once costs exceeded human staff expenses 1

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. Bravo acknowledged unresolved questions around governance, cybersecurity, and whether agentic tools deliver expected returns, calling it "a period of discovery now, which creates pressure on the whole system" 1

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Repricing of Software Models Continues

While the share-price panic has clearly subsided, the deeper repricing of software away from earning a premium simply for being software and toward usage, proprietary data, and genuine AI leverage is only beginning 1

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. A recent report from Bain & Company noted that AI continued to loom as both a disruptive factor and an opportunity to transform how portfolio companies and private equity firms operate 2

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. For investors and software companies alike, the challenge ahead involves navigating a market where AI as a significant tailwind coexists with fundamental shifts in pricing models and competitive dynamics. Bravo's declaration may signal the end of one crisis, but the transformation of the software industry has only just begun.