SaaSocalypse Looms: AI Shakes Up App-Layer Software, Investors Brace for Impact

• Founders and investors are preparing for a "SaaSocalypse" as AI's impact on app-layer software threatens traditional Software as a Service (SaaS) models.
• Sridhar Vembu of Zoho notes the stock market's negative reaction to SaaS companies, attributing it to years of excessive sales/marketing spending over product development, with AI now popping the "inflated balloon."
• The debate intensified after Anthropic's legal AI tool launch and recent AI model upgrades focusing on coding and autonomous agents, questioning the need for UI-heavy applications.
• Market value losses, including a $285 billion wipeout in one day, and significant drops for companies like HubSpot, Atlassian, Snowflake, and Microsoft, highlight the concrete impact.
• While app-layer SaaS is most affected, data, infrastructure, and communication tools show more resilience; the industry is not disappearing but evolving towards autonomous, outcome-driven systems with new pricing models.