Graveyard
SaaS stocks are trading at their lowest valuation in a decade over fears that agentic AI will eat their lunch. On Wall Street, coming back from the dead is never out of the question.
Gold’s move past the US$5,000 mark and silver’s breach of US$100 might suggest something was afoot on Wall Street this week. Instead, U.S. stocks rallied ahead of the Fed meeting and a big week of corporate earnings, including reports from Meta ($META), Microsoft ($MSFT), Tesla ($TSLA) and Apple ($AAPL).
The biggest tech gainers weren’t the usual suspects. Rising 10% on Monday were Cloudflare ($NET) and DigitalOcean ($DOCN) – beneficiaries of a momentum trade centred around ‘Clawdbot’ hype.
Clawdbot is an open-source AI agent built on Anthropic’s Claude, often described as ‘Claude with hands’ or a ‘24/7 AI employee.’ It’s an autonomous, task-executing agent that reshapes the software stack, and investors are starting to price in who benefits.
Cloudflare sits between AI agents and the things they need to perform tasks, including APIs and user endpoints. DigitalOcean makes agentic AI accessible through its Gradient AI platform, positioned as the cheaper alternative to hyperscaler cloud providers.
Both firms monetise different layers of the agent stack and stand out as investor favourites as the narrative builds around agentic AI. It’s a catalyst for some SaaS firms, but for others it's a killer. Adobe ($ADBE), Atlassian ($TEAM), Salesforce ($CRM), ServiceNow ($NOW) and Workday ($WDAY) are trading near decade-low forward PE multiples.
Is this really the SaaS apocalypse? Not necessarily. The key to survival could lie in integrating the threat. A decade ago, investors feared that Amazon ($AMZN) would be the death of retail. But firms like Target ($TGT) and Walmart ($WMT) turned their physical stores into edge warehouses for buy-online same-day pickup services. It neutralised Amazon's speed advantage, and $AMZN and $TGT went on to hit new highs.
Some SaaS firms have started redesigning pricing so they get paid for AI ‘digital labour.’ Salesforce’s new Agentforce Flex Credit model charges a US$0.10 per-action fee for AI-driven tasks. ServiceNow charges a 30% premium to access Now Assist – where AI agents can talk to each other across platforms.
AI agents have changed the game for SaaS. And it's a different game for investors too: software stocks trading at cheap multiples doesn’t necessarily translate into value. The ones that adapt will be re-rated; the ones that don’t will stay cheap for a reason.
This is not financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.
