Airtable's fire sale and Datadog's plunge triggered panic, but Atlassian's 35% surge on strong earnings flipped the script, reviving the SaaS debate.
The SaaSpocalypse debate intensified this week as software stocks swung from panic to euphoria and back. Airtable's acquisition at a fraction of its peak valuation, followed by sharp drops in HubSpot and Datadog on earnings, reinforced fears that AI tools are eroding the value of traditional software products. By Friday, Atlassian and Twilio had each surged more than 20%, giving the sector a reprieve.
Investor concerns that AI coding agents from OpenAI and Anthropic are hollowing out software economics have been building for months, said Matt Hedberg, a software analyst at RBC Capital Markets. "People were pencils down in the space," he said, describing first-quarter sentiment as so negative that clients wouldn't meet with software companies.
The week's selloff began Tuesday when Italian buyout firm Bending Spoons agreed to buy workflow startup Airtable for less than $1.3 billion, a fraction of its $12 billion peak valuation. Two days later, HubSpot had its worst day in a decade, falling 19%. Datadog slid 19%, its steepest decline since its 2019 IPO, after the company said its largest AI client had cut usage since June.
The tone shifted after Thursday's close. Atlassian reported its most profitable quarter since 2021, sending shares up 35% on Friday, the biggest one-day gain since its 2015 IPO. Twilio rose more than 20%. Cloudflare added 5.6%.
Box CEO Aaron Levie called the results a validation. "There was a misplaced thesis over the past 6 months that somehow agents would be bad for certain software categories," he wrote on X. "There's definitely truth in this in some areas, but many were parsing this poorly."
RBC analyst Rishi Jaluria, who does not cover Atlassian, said much of the pop came from short covering. "Everyone says Atlassian is going to get crushed by Claude Code and OpenAI Codex," he said. "Any proof point that says this company isn't dead is going to result in a short squeeze."
The iShares Expanded Tech-Software Sector ETF fell 24% in the first quarter, its worst since 2008. The ETF has since bounced and is now down only 3% for the year, while the Nasdaq is up 15%.
AlphaScala's scoring system rates Atlassian at 34 out of 100, a Weak signal, reflecting the headwinds the stock faced before Friday's rally.
Hedberg warned that the reprieve may be temporary. "There's these reminders that we're not out of it," he said. "Everything's not smooth sailing."
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