Clouded Judgement: Software Valuations in the Age of AI Disruption

The article analyzes the sharp decline in SaaS valuations (median NTM revenue multiple at 3.6x, lowest in 10+ years) amid AI disruption fears, presenting competing bull and bear arguments about whether legacy software will be displaced by AI agents or retain durable competitive advantages. The author argues the market is overly pessimistic short-term but likely correct long-term: while cloud migrations will continue and systems of record have real switching costs, AI agents will eventually capture most incremental value, pushing legacy SaaS toward lower-margin middleware positions.