AI-Driven Market Correction: From Valuation Questions to Relevance Risk

The 2026 SaaS market downturn differs fundamentally from 2016's valuation-driven correction. While investors previously questioned pricing, they now question product relevance as AI threatens to automate or commoditize core software functions like design, coding, and observability. Revenue growth rate has become the primary predictor of stock performance, with companies growing above 20% appreciating while slower-growth incumbents decline significantly.