If artificial intelligence could build applications, automate workflows and let companies create their own tools, why keep paying large subscription fees to traditional software providers?
That fear hit companies such as Salesforce and ServiceNow hard.
Now the story may be changing.
Salesforce recently reported its strongest growth in net new annual order value in four years, while its Agentforce AI products reached about $1.5 billion in annualized recurring revenue. Reuters Breakingviews argues that investors are beginning to look beyond AI disruption and toward AI monetization.
Why AI Initially Hurt Software Stocks
Traditional SaaS companies rely on recurring subscriptions.
The concern was simple:
AI makes software easier to build → customers need fewer traditional applications → SaaS pricing power falls
Powerful coding assistants made this risk feel more realistic.
If businesses can build custom applications faster and more cheaply, some software categories could face more competition.
That remains a real risk.
But it is only one side of the story.
Why Existing SaaS Companies Still Have an Advantage
Large software platforms already sit inside important business workflows.
They may hold:
- customer data
- employee records
- sales pipelines
- financial information
- security permissions
- years of integrations
Replacing that infrastructure is not always easy.
These switching costs can protect established software companies.
A new AI tool may be impressive, but companies still need trusted systems where their data, permissions and workflows already live.
That gives existing SaaS providers an opportunity:
Add AI to the software customers already use.
How AI Can Create New Revenue
AI can become another product layer rather than a replacement for software.
A SaaS company might charge more for:
AI assistants
Tools that summarize information or answer questions.
AI agents
Software that performs tasks automatically.
Usage-based AI services
Customers pay according to model or agent usage.
Premium automation
AI completes workflows that previously required employees.
If these products save customers time or money, companies may be willing to pay more.
That changes the investment story from:
“AI destroys SaaS”
to:
“Which SaaS companies can monetize AI?”
Why Salesforce Matters
Salesforce is an important test case because its core platform already connects deeply with customer sales and business data.
Its Agentforce products are designed to place AI agents inside those existing workflows.
Reuters reported that Agentforce annualized recurring revenue reached $1.5 billion, above analyst expectations, while new subscription activity improved.
That does not prove every software company will benefit from AI.
It shows that AI revenue can become measurable rather than theoretical.
What Investors Should Watch
For software stocks, the most important question is no longer whether a company says it uses AI.
Investors should look for actual economics.
| Signal | Why It Matters |
|---|---|
| AI recurring revenue | Shows customers are paying |
| Subscription growth | Shows core demand remains healthy |
| Customer retention | Tests switching costs |
| AI pricing | Shows monetization power |
| Operating margins | Reveals the cost of delivering AI |
| Customer adoption | Separates real usage from hype |
The strongest companies may be those that use AI to deepen existing customer relationships rather than simply adding an AI label to their products.
The Risk Is Still Real
AI can still disrupt software.
Some simple applications may become easier to replace.
Competition may increase.
AI infrastructure can also be expensive, putting pressure on margins if customers are unwilling to pay enough for the new features.
That means the winners may not simply be the companies with the best AI technology.
They may be the companies with the strongest combination of:
AI + proprietary data + distribution + switching costs + recurring revenue
The Bottom Line
AI does not automatically save software stocks.
But it also does not automatically destroy them.
The market is moving from a simple disruption story toward a more useful question:
Which software companies can turn AI into durable revenue?
For established SaaS companies, strong customer relationships, embedded workflows and proprietary data can provide a powerful foundation for AI products.
The next phase of the software market may therefore be less about fear of AI — and more about who can actually make money from it.
For more market analysis, trend research and model-driven tools, sign up to TradingSimuLab and explore the Trend Detector alongside the wider five-model research framework.
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