This week’s “SaaSpocalypse” tape is simple: AI shrinks headcount → fewer seats → fewer subscriptions → software is toast. That logic is why a single headline about a company cutting thousands of jobs can ripple into a broad selloff across enterprise software. Investors aren’t just afraid of competition from new AI-native entrants… they’re afraid the pricing unit of SaaS itself (the seat license) becomes a melting ice cube. If a CFO believes “smaller and flatter teams” is the new operating system, the market instantly starts doing the math on every vendor that sells per employee, per user, per rep, per agent. And because so much software has been priced like a tax on hiring, any narrative that hiring is structurally impaired becomes a narrative that SaaS is structurally impaired.

But here’s the part the doomers miss: lower barriers to building software don’t destroy the software market — they expand it… and concentrate it. We’ve seen this movie twice. First, the internet era: the “number of websites” exploded… and the value consolidated into a handful of giants. Second, the SaaS transition itself: it didn’t “kill” legacy software — it forced a re-org, created bigger markets, and crowned a few platforms. That’s why the better frame isn’t “SaaSpocalypse”… it’s SaaSolidation. AI is turning thousands of point solutions into features inside the dominant platforms. The winners won’t be the companies with the cleverest chatbot demo — they’ll be the ones with distribution, workflow ownership, enterprise trust/compliance, and the balance sheet to buy what they don’t have. In other words: the market probably isn’t going to zero… it’s going to four or five gravity wells.

These are the names most likely to absorb AI change (and/or weaponize it) because they own distribution, data, workflows, or compliance — and can consolidate the category.

These are most exposed if the market’s fear becomes reality: fewer seats, more bundling, more “AI makes this a checkbox.”

Some software sells off because the story is scary, even if the fundamentals may end up benefiting from AI-driven usage:

Not investment advice — just a clean way to frame who gets hit first vs. who gets stronger if consolidation is the real endgame.

Today’s big news will be Iran. Normally, wars aren't a big deal for the market so don’t be shocked if we close well off the lows here. But, don’t assume the usual playbook is really usual either. Keep an eye on oil prices for the real tell.

NVDA selling off on blowout earnings wasn’t a good look for AI on Friday. It looks ugly on a daily chart, on a weekly it's just going nowhere….

Friday’s PPI report was hotter than expected, which should be a negative for Treasuries, it wasn’t…..

TLT continues to rally, and I think bond traders are telling us something. They are afraid of credit concerns, AI disintermediation, and geopolitical risk. The macro backdrop still appears strong, so when/if these fears subside I would expect rates to move higher.

I do think all of this AI spend is inflationary. AI demand for commodities, compute, land, and energy ought to push up prices. The only way to justify significant easing is that AI itself will be disinflationary before it’s inflationary. I’d be careful being long Treasuries here.

Interestingly, Treasuries are down this morning which you wouldn't expect when there is a war.

The market continues to be in a tech correction, notice the difference between something like the Technology Select Sector SPDR (XLK)….

And the iShares S&P 500 Value ETF (IVE)…..

Some other themes we are watching…..

Block laying off ~40% and explicitly crediting AI is a signal the market will extrapolate: fewer employees → fewer seats → slower “installed-base expansion.”
Implication: even great software businesses can see multiple compression until they prove they can monetize AI in a way that offsets seat shrink (usage-based pricing, premium tiers, security/compute add-ons, workflows that expand to customers/partners vs employees).

Who’s most exposed? HR/finance/procurement/back-office seat models and anything where “AI = fewer people” is the customer’s ROI case.
Who’s relatively insulated? Mission-critical systems where value is tied to transactions, risk, uptime, compliance, or infrastructure (not employee count).

“Memory prices doubled,” “BOM share up,” and IDC-style unit decline framing is not noise. It’s the classic pattern:

Implication: near-term “beats” in PCs can be optical. Watch for margin pressure and “volume without profit.” This also reinforces why AI infrastructure names with pricing power and backlog can diverge from consumer electronics.

You see this contrast in some earnings:

Implication: investors are moving from “AI exposure” to “AI exposure + capital discipline.” The winners are the ones that can scale without turning into a balance-sheet story.

AAOI’s guide + commentary that it’s a “rising tide” read-through is basically:
constraint + demand > share shift (for now).
Implication: optical remains levered to the “networking intensity” of agentic/reasoning workloads. The risk is you’re buying into a hot tape, so sizing/timing matters.

Todays stock is Lockheed Martin. One of my favorite sayings is “as long as war is profitable we will always have wars". LMT benefits from a prolonged war in Iran and is also one of the one of the top holdings in UFOD for obvious reasons…

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