Clouded Judgement: Beat and No Raise? – SaaS Multiple Expansion Without Earnings Growth

Despite SaaS companies beating Q3 earnings expectations with minimal changes to full-year estimates (0.0% median change), software valuations have expanded 20% since early November, driven by macro stabilization, anticipated AI revenue contributions in 2025, benign rate expectations, and post-election market optimism. The article analyzes whether recent multiple expansion is justified given flat earnings growth and explores whether the software sector could represent the next major market trade following Mag7 saturation.