Clouded Judgement: Market Rotation from Profitability Back to Growth

Software companies have successfully achieved FCF profitability after a 2-year focus on efficiency, but median growth rates have declined significantly from 31% (2020) to 12% (current). Market valuation signals and leading indicators suggest a rotation back toward rewarding growth, driven by AI investment cycles and improving macro conditions, with the critical question being whether revenue growth will materialize to justify these investments.