Marc Benioff and his company Salesforce have shown that the feared "SaaSpocalypse" is more myth than reality. Over the past year investors dumped roughly $2 trillion of software stocks on the belief that generative AI would make SaaS redundant. In contrast, three heavyweight software groups, Salesforce, Booking Holdings and IBM, are now posting stronger margins and expanding AI-related revenue streams.
Why the panic seemed plausible
The hype around large language models (LLMs) sparked a bearish thesis that AI agents would replace the need for traditional SaaS platforms. Analysts argued that customer-relationship tools, travel booking engines and legacy consulting software would become interchangeable commodities, eroding pricing power and compressing margins.
Salesforce turns data into a moat
Critics warned that LLMs such as those from OpenAI or Anthropic would make a CRM system redundant, reducing Salesforce to a passive database. The stock fell about 20 % this year and 40 % from its peak. In reality, the company's massive repository of customer records is becoming more valuable. As analysts at Wells Fargo observed, "lower cost of intelligence increases value of incumbent data."
"AI agents are only as good as the data they operate on," said a Salesforce spokesperson.
During the past twelve months Salesforce processed over 216 trillion customer records and ingested 104 trillion records in the most recent quarter alone. Its Agentforce platform, which bundles AI agents with the CRM, grew from $100 million to $1.5 billion in annual recurring revenue within 18 months. Partnerships such as the integration of Anthropic's Claude, dubbed "Claudeforce", further cement the company's pricing power.
The 2023 acquisition of Slack has also proved pivotal. Slack provides the conversational context that AI agents need, and usage surged when external agents were granted access, with a million users joining within a month.
Booking Holdings safeguards travel transactions
Some analysts suggested that AI chatbots could replace online travel agencies, putting Booking Holdings at risk. The stock, however, has rebounded to near-all-time highs. The mistake was treating Booking.com as a simple search engine rather than a merchant-of-record that handles payment processing, multi-currency settlement and dispute resolution for three-quarters of its bookings.
Google has made clear it will not become an OTA, and OpenAI withdrew its in-chat checkout after a problematic rollout. This leaves a gap that Booking Holdings fills, especially for independent hotels that lack the infrastructure to manage global payments.
CEO Glenn Fogel has steered the company to use AI for traffic acquisition, but AI-generated traffic still accounts for less than 1 % of room nights. As AI adoption grows, the platform's proven ability to convert clicks into bookings positions it to capture a larger share of future AI-driven travel searches.
IBM builds the AI backbone
When IBM shares plunged 25 % after a memory-chip shortage, many feared AI would erode its $21 billion consulting arm and legacy software licences. The opposite has occurred. AI now represents half of all new consulting contracts and contributes to a backlog that commands higher margins because billing is tied to outcomes rather than hours.
Red Hat, IBM's open-source platform that enables AI agents to run across any cloud, grew 11 % as demand for flexible AI infrastructure rose. Overall, IBM's AI-related revenue has more than doubled in the last year, turning the company into a paid builder of the AI transition rather than a casualty.
What comes next?
The key question for investors is not whether AI will disrupt software, but which firms own the assets AI agents cannot function without. Salesforce holds the customer data that fuels intelligent agents, Booking Holdings controls the travel-booking infrastructure, and IBM provides the cloud-agnostic software layer that powers AI workloads. As AI adoption deepens, these moats are likely to become more valuable, giving the companies greater pricing power and opening new revenue streams.
Looking ahead, analysts expect continued growth in AI-enhanced services, with each firm expanding partnerships and developing proprietary tools that lock customers into their ecosystems. For shareholders, the narrative is shifting from panic to prudence: the software sector may be reshaped, but the winners are emerging clearer than ever.