by Richard Moore
The recent collapse in SaaS stocks is being framed as a verdict:
AI changes everything and listed software companies lose.
As an angel investor and former fund manager, I don’t see it that way.
I spend most of my time trying to imagine what the world will look like 5–10 years from now. Because that’s what early-stage investing really is: allocating capital into a version of the future that does not yet exist.
My mental model is simple:
AI changes everything.
Not incrementally. Structurally.
The $10 trillion question
Jensen Huang and Masayoshi Son have both articulated a version of the same thesis: AI will displace roughly $10 trillion of global labour annually.
Let’s assume they’re directionally correct.
If AI systems replace $10T of labour, the companies providing those AI systems will capture some of that value. Say they capture 10–20%.
That’s $1-2 trillion in annual revenue potential.
The remaining 80–90% accrues to:
- Customers (higher margins)
- Consumers (lower prices)
- Capital (productivity gains)
That is not a shrinking technology market. That is an expanding one.
Why then are SaaS stocks collapsing?
The market’s current fear seems to be:
- AI commoditises software
- Pricing collapses
- Margins compress
- Moats evaporate
In other words: yesterday’s SaaS leaders become tomorrow’s disrupted incumbents.
But here’s the problem with that narrative: if enterprises are replacing labour with AI, they are not spending less on technology. They are spending more.
Technology is becoming the primary cost line, not the support function. The listed SaaS collapse implies technology budgets shrink. The AI thesis implies technology budgets expand dramatically. Both cannot be true.
Where does the value accrue?
There are three possibilities:
1. All the value accrues to unlisted AI-native startups
If so, those companies must eventually be worth trillions.
Possible? Yes.
Probable? Less so.
Because history suggests something different.
2. Incumbents adapt and capture the majority
Large listed software companies have:
- Distribution
- Enterprise relationships
- Embedded workflows
- Data
- Balance sheets
They can:
- Build AI internally
- Acquire early-stage AI companies
- Layer AI into existing products
- Shift pricing models
And we are already seeing the early signs:
- Seat-based pricing → usage pricing
- Usage pricing → outcome pricing
This is not disruption. This is repricing.
3. A hybrid outcome (most likely)
Not all incumbents will execute well.
Some will fail to build. Some will overpay. And some will stagnate.
But many will adapt.
And what will they buy? The very same early-stage AI companies angel investors are backing today. This is the part that excites me.
As an angel investor, this is the setup
If:
- AI displaces massive labour pools
- Enterprises increase technology spend
- Incumbents must buy to survive
Then early-stage AI companies are not competing against SaaS. They are future acquisition targets for SaaS. History doesn’t repeat, but it rhymes.
The cloud era created Salesforce, Adobe’s reinvention, Microsoft’s renaissance. The AI era will likely do the same.
The pricing model shift is the signal
One of the most important changes happening right now is pricing architecture.
We’re moving from:
- Seat-based pricing (humans pay per head)
to - Usage pricing (compute consumed)
to - Outcome pricing (results delivered)
This is profound, because when you price on outcomes:
- You participate in value creation
- You align incentives
- You scale with productivity
That supports higher, not lower, aggregate software revenue.
The market may be confusing transition with destruction
Public markets often punish transitions.
They hate uncertainty, they hate margin compression during reinvestment cycles, and they hate business model change.
But reinvention is not annihilation.
If AI really does unlock trillions in labour substitution, software becomes more central to the economy, not less. The listed SaaS collapse may be less about structural decline and more about:
- Timing
- Earnings volatility
- Multiple compression
- Fear
My base case
This is what I see happening over the next decade:
- Technology spend as % of GDP rises
- AI becomes embedded in every major enterprise platform
- Most value is captured by scaled distribution players
- Early AI-native companies become strategic assets
- Pricing shifts toward outcomes
In that world, the collapse in SaaS is not the end, it is the repricing of a new growth cycle. And as angel investors, we are underwriting the acquisition targets of the next platform shift.