SaaS Is Not Dead (Thematic)
AI-driven pessimism has compressed SaaS multiples to levels that underestimate moat durability and long-term cash flows.
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Investment Thesis
AI is reshaping the SaaS landscape, but it is not killing SaaS, it is separating strong moats from weak ones. Large-cap SaaS companies operate mission-critical systems with high switching costs, deep regulatory integration, and decades of hardened code and data. In these businesses, AI acts as a complement, not a replacement.
Smaller and mid-cap SaaS players with narrow functionality, low feature utilization, or weak lock-in are far more exposed to AI substitution and pricing pressure. As a result, AI adoption accelerates competitive divergence rather than sector-wide decline.
With SaaS multiples compressed across the board during the “SaaS Winter,” valuations now imply excessive long-term risk even for highly defensible platforms. This creates an opportunity to express an outperformance trade: large-cap SaaS outperforming small and mid-caps.
The thesis is implemented via a large-cap SaaS bask…