The “SaaSpocalypse” is over and AI is now providing “huge tailwinds” for software companies, said founder and managing partner of private equity giant Thoma Bravo.
Software-as-a-Service stocks came under pressure in February, but Anthropic’s announcement of advanced AI tools for collaborative agent Claude caused a sharp decline, raising investor fears about the space’s “SaaSpocalypse.”
But Orlando Bravo, founder and managing partner of Thoma Bravo, told CNBC that investors are underestimating software companies’ ability to adapt.
He said his firm’s portfolio companies, one of the world’s largest private equity investors in software and technology-enabled services, manage about $200 billion in assets and have combined revenues of about $35 billion, much of which is “growing rapidly” thanks to AI.
“The Surpocalypse is over. It’s over. It’s over,” Bravo said in a conversation with CNBC’s Annette Weisbach at the private equity and venture capital conference SuperReturn International in Berlin.
“People thought software companies were static, doing one thing,” he says. “But software companies continue to evolve along with their infrastructure.”
Bravo added that automating certain aspects of human decisions and processes can take software companies to a “whole new level.”
“About 50% of our new revenue will be AI revenue and agent revenue,” he said, predicting that over the next few years software companies and AI will “collaborate” on “new agent solutions” for enterprise customers.
“AI is a huge tailwind for software companies,” he added.
Software fought back after SaaSpocalypse
Software stocks have been fighting back since February. of iShares Enhanced Technology Software Sector ETF It rose 21% in May, its best monthly performance since October 2001, and is up more than 9% on a three-month basis.
In a wide-ranging interview, Bravo also said that high-growth sectors such as semiconductors continue to offer an attractive low-entry environment for investors.
Bravo said the market is in a correction period. He said investors and companies are still grappling with issues around governance, cybersecurity and return on investment from new AI agent tools.
“We’re in a period of discovery and the whole system is under pressure,” he said.
