AI SaaS Companies Will Be More Profitable

AI will drive significant profitability improvements in SaaS companies despite higher infrastructure costs, because AI creates deflationary effects across R&D, S&M, and G&A expenses that outweigh COGS inflation. The author projects that AI-infused software companies will achieve margins substantially better than the current -10% average net income of public SaaS businesses as model efficiency improves and costs decline by orders of magnitude.