Tue, Sep 8, 2026|Chris Igou

The 'SaaS Revival' Is Underway

This essay was originally published in DailyWealth Trader, a daily trading advisory, and has been adapted. To learn more about this service, click here.

Claude 3.5 Sonnet handed software companies a shovel and told them to dig their own graves...

AI company Anthropic released the model in mid-2024. It was further proof that AI excelled at coding. And that threatened the software empire.

Previously, coding helped software companies grow their businesses, retain customers, and strengthen their moats. But if AI could do the same thing faster and cheaper, then this industry was bound to fall victim to the AI takeover.

So the market got ahead of the trend and punished software right away. Salesforce (CRM) fell more than 50% from its December 2024 high to February 2026. And the overall sector was down 30% over the same period.

This sell-off became known as the "SaaSpocalypse" – named for these companies' Software as a Service ("SaaS") business models.

But there was one major problem with this story that shows investors' beliefs may have been premature...

Software companies are using AI, too. And instead of killing off SaaS businesses, AI is making them stronger. And the sector is breaking out as a result.

Wall Street Gave Up on Software Too Soon

Despite SaaSpocalypse fears, the software industry's bellwether is still growing rapidly today.

Salesforce is the largest customer relations management company in the world. And the $207 billion giant just reported a massive earnings beat... with revenue up 11% year over year.

Salesforce shares rose 23% the following day. And management cited AI as a clear growth driver.

Here's what CEO Marc Benioff had to say about the performance...

AI is delivering value across every layer of our platform. We're seeing incredible demand for our AI and data products, with [annual recurring revenue] about to cross $4 billion.

You can see the pop in the stock below...

While the long-term trend is down, Salesforce has staged a massive comeback over the past three months.

This isn't just a single-stock story, either. We can see this turnaround is happening across the sector using the iShares Expanded Tech-Software Sector Fund (IGV).

IGV tracks the performance of more than 100 U.S. software companies. The fund has been surging since April.

Since then, the uptrend has only gotten stronger. Some of its biggest holdings have taken off in the past few months, helping IGV reclaim its June high...

Both charts nearly mirror each other...

The fund fell hard into April 2026. But it has been trending higher ever since... making higher highs and higher lows. This tells us the uptrend is on.

This is likely just the start of a much bigger rally in tech. There's plenty of upside potential in software from here.

Major software companies are emerging as winners during the AI boom. Expect that to continue from here.

Good investing,

Chris Igou

The 'SaaS Revival' Is Underway

Wall Street Gave Up on Software Too Soon

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