I Hope You Bought
They said software was dead... I told you that was just not true.
Well, half a year has passed, and I don't want to claim victory yet, but the fat lady is warming up her vocals.
To recap, earlier this year, Software as a Service ("SaaS") stocks went through one of their steepest sell-offs of the past decade. It was so severe that folks started calling it the "SaaSpocalypse."
The reason behind the software massacre was AI... specifically, concerns that AI would render SaaS companies obsolete.
Investors feared that increasingly capable AI agents, like Anthropic's Claude Cowork platform, would eventually be able to replace today's specialized software applications. After all, why pay for software subscriptions when AI models can write code for less money?
But we knew that logic was nonsense. As I wrote back in February...
The market is currently in a "shoot first, ask questions later" phase. And a lot of quality software companies that are not going to be replaced by AI are being thrown out with the bathwater.
Yes, there are going to be software businesses that become obsolete because of AI. But many will be just fine since they'll use AI to keep their market share.
Even Nvidia (NVDA) CEO Jensen Huang agrees with this. He recently pushed back against the market panic and said that AI replacing software tools is "illogical" because AI still depends on software infrastructure to function.
So I think there's going to be a massive buying opportunity for many of the best software names.
In June, one of my senior analysts, Jeff Havenstein, penned an essay titled "The 'SaaSpocalypse' Is Coming to an End." He explained that the best software companies could not simply be replaced by AI...
The fatal flaw in the "AI will kill software" thesis was a misunderstanding of what a great software company actually provides. Wall Street was treating software like it's just raw code. It isn't.
For starters, software platforms often hold decades of proprietary customer data, historical transactions, regulatory compliance logs, and customized operational rules. Even if AI can generate similar software, it can't replace the trusted system of record that an organization has built its workflows around.
Plus, switching costs are high. It takes years and millions of dollars to train a workforce on a new system. Once a software product is woven into the daily habits of thousands of workers, it becomes a "toll booth" business. The cost of ripping it out outweighs almost any potential savings.
Most important, we're seeing many software companies use AI to make their products so good that big businesses wouldn't consider switching to a free tool.
Now that some time has passed since the initial sticker shock of the SaaSpocalypse, let's check in on how some leading software firms are doing.
We'll start with Adobe (ADBE).
The company just reported its latest round of earnings last week. Wall Street braced for impact, expecting creative professionals to abandon Adobe's subscription tools in favor of AI image generators. Instead, Adobe posted record quarterly revenue of almost $6.8 billion, up 13% year over year ("YOY").
Plus, the company's AI-first annual recurring revenue grew more than 150% YOY. This proves that demand for AI-powered creative software did not destroy Adobe's platform – it boosted it.
Adobe is now off its summer lows by 33%.
There's also Salesforce (CRM), which reported earnings at the end of August.
For its fiscal second quarter, Salesforce's free cash flow rose 81% YOY to $1.1 billion. Also, revenue came in at $11.3 billion. That's an 11% jump YOY, handily beating Wall Street estimates. The strong result prompted management to raise its full-year revenue guidance.
Salesforce CEO Marc Benioff did not hold back on the earnings call... He deemed the SaaSpocalypse narrative pure "nonsense" and pointed out that dire predictions of AI eating enterprise software simply failed to come true.
The standout news was "Claudeforce," an expanded partnership integrating Salesforce directly with Anthropic's Claude models. Far from replacing software, AI is acting as an engine for enterprise platforms.
So, as you can see, Salesforce isn't losing ground to AI... It's monetizing it.
Wall Street took notice immediately. Salesforce surged more than 20% in a single day following the Claudeforce announcement.
And now, the stock isn't too far off its 52-week high. Take a look...
The lesson is clear... The best software platforms hold deep, moat-protected customer relationships and proprietary data. AI may provide the intelligence, but software provides the infrastructure and access that lets AI get things done.
In the end, the SaaSpocalypse narrative was just overblown fear. If you realized that at the time and were greedy while others panicked, you've probably made a lot of money.
However, if you weren't greedy and didn't go on a buying spree, it's not too late. There are still more gains to come. In fact, my April recommendation in my Retirement Millionaire newsletter is looking very promising...
Investors sold off this company during the SaaSpocalypse, convinced that AI would make it obsolete. But we knew better. As we explained in the issue, the unique product this business offers is simply too important to be replaced with AI.
We're already up 23% on the position. And we believe more gains will arrive at the end of this month when the company reports earnings. We're expecting a great quarter, just like Adobe and Salesforce had.
There's still time to buy this stock before shares rocket higher.
Current Retirement Millionaire subscribers can read about the company here.
And if you aren't yet a subscriber but would like to learn more, click here.
What We're Reading...
- Something different: This chart shows just how important the NFL is for TV.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
September 16, 2026