Deutsche Bank Says the SaaSpocalypse Is Over as Software Stocks Trade at a Massive Discount |
Deutsche Bank Says the SaaSpocalypse Is Over as Software Stocks Trade at a Massive Discount
Things are starting to look up for software-as-a-service companies, and hedge funds are taking advantage.
BY BRIAN CONTRERAS, STAFF WRITER @_B_CONTRERAS_
The weeks-long unloading of software stocks—especially those in ventures that offer software as a service, or SaaS—may finally be coming to an end as investors move to take advantage of the depressed prices. Could this be the end of the SaaSpocalypse?
“After asking various experts, generalists, Gemini, ChatGPT and Claude, we have still not come across a single software company that expects a negative revenue effect from AI in 2026,” said a Deutsche Bank strategy note released yesterday, per Bloomberg. “We think AI disruption worries have peaked.”
Deutsche Bank Securities data, meanwhile, suggests that hedge funds are growing more eager about SaaS investments, the media outlet adds.
A few key indicators already point to an upswing. The S&P 500 software index is currently up 1.5 percent over the past month, Google Finance data indicates, with many SaaS players also up over the same time-span: Salesforce (up 4 percent), Intuit (10 percent), Oracle (4 percent), Shopify (8 percent), HubSpot (24 percent), Docusign (7 percent), ServiceNow (13 percent), Wix (22 percent) and Adobe (6 percent).
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It’s an uneven recovery, however, with some firms still down since mid-February, including Atlassian (down 14 percent), Asana (6 percent), SAP (6 percent) and Workday (5 percent).
Still, Bloomberg argues, many SaaS stocks appear undervalued thanks to the longer-term selloff that’s been happening since last year. The outlet notes that a Goldman Sachs software basket is currently trading at 22 times forward earnings—less than half of its average multiple over the past decade—while profit estimates for SaaS companies heading into 2026 continue to rise.
Bloomberg Intelligence, for instance, indicates that S&P 500 software and services firms are projected to see 21 percent earnings growth this year, suggesting that fundamentals are strong even if investor sentiment has taken a hit.