Introduction
In recent months, a phrase has been frequently repeated in the tech world:
"Artificial intelligence will kill SaaS companies."
But when we look at the real numbers, we find a completely different picture.
HubSpot is growing at a rate of about 19%.
Xero is achieving growth of around 23%.
Atlassian is recording growth of about 23%.
Figma is achieving growth of around 40%.
Adobe's revenue has reached $23.8 billion.
In other words:
SaaS companies are still growing.
But the strange paradox is that many of these companies have seen a significant drop in their stock prices.
And here the real question arises:
Why are SaaS company valuations declining despite their continued growth?
To understand what is really happening, we need to look at the economic strategy of each company, not just the sensational headlines.
Table of Contents
1. The real problem in valuing SaaS companies 2. The story of Xero and the American market bet 3. Does artificial intelligence threaten Atlassian? 4. Adobe's real test with artificial intelligence 5. Why SaaS doesn't die despite AI 6. A framework for valuing SaaS companies 7. Conclusion
1. The real problem in valuing SaaS companies
There is a big difference between:
The actual growth of the company
and
Investor growth expectations.
Often, a company may achieve good results, but the market was expecting much better results.
When that happens:
Valuations drop even if growth continues.
And this is what is happening now in many SaaS companies.
But when we look deeper, we find that the reason for each company's decline is completely different.
2. The story of Xero and the bet on the American market
The Australian company Xero is considered one of the most important cloud accounting platforms in the world.
The product offers a powerful set of tools:
Invoice management
Financial reporting
Bank integration
Tax management
Multi-currency support
But despite this strength, the stock has faced significant pressure recently.
The reason is due to a large acquisition deal.
In 2025, the company acquired the American payment platform Melio for about $2.5 billion.
The goal of the deal is clear:
To expand aggressively into the American market.
However, this move carries several risks:
Difficulty in integrating systems
Challenges of entering the American market
Cost pressures
Therefore, the market is now waiting for the results of this bet.
Also read:5 AI SaaS projects anyone can launch in 2026
3. Does artificial intelligence threaten Atlassian?
Atlassian may be one of the few companies that could actually be affected by artificial intelligence.
The reason is simple.
Its core products such as:
Jira
Confluence
Belong to the project management and documentation category.
And this category could theoretically be built using modern AI tools.
But there is one very important factor that reduces this risk.
And that is the cost of transition.
Thousands of companies have built their operations entirely around Jira.
This includes:
Task management
Sprint systems
Development reports
Integration with DevOps tools
Rebuilding these systems is not a simple decision.
4. The real Adobe test with artificial intelligence
The story of Adobe is a little different.
The company is still achieving strong numbers:
Revenue: $23.8 billion
Subscription growth continues
But the market has begun to ask a new question:
Does artificial intelligence reduce the need for professional design tools?
Today, anyone can create:
Images
Videos
Designs
Using AI tools in minutes.
But the truth is:
Professional designers and production companies still rely heavily on Adobe tools like Photoshop and Premiere.
However, ordinary users may turn to simpler tools like:
Canva
AI-powered design tools
5. Why SaaS doesn't die despite AI
There are three main reasons why SaaS remains strong.
1. Switching costs
Changing a SaaS platform may mean:
Transferring massive amounts of data
Retraining employees
Rebuilding processes
And that is very costly.
2. Ecosystems
Many companies do not offer just one product.
Instead, they provide a comprehensive system of tools.
Example:
Adobe Creative Cloud
Atlassian ecosystem
3. Network effects
When millions of people use the same platform, it becomes difficult to replace.
This is called:
Network Effects
6. A framework for evaluating SaaS companies
Instead of asking:
Will artificial intelligence kill SaaS?
The smarter question is:
Does artificial intelligence weaken the competitive advantage of these companies?
The 7 Powers framework can be used to assess this.
Ask these questions:
What is the company's competitive advantage?
Is this advantage weakening?
Or is the market simply re-evaluating the price?
7. Conclusion
Artificial intelligence does not kill SaaS companies.
But what is happening now is:
1️⃣ Market reassessment
2️⃣ Testing the strength of technical monopoly
3️⃣ Evaluating new strategies
Companies that have:
Deep products
Strong ecosystems
Connected customers
Will remain able to grow for many years.
Key Insights
SaaS companies are still achieving strong revenue growth.
A drop in stocks does not mean the industry is collapsing.
Artificial intelligence may change some categories but will not eliminate SaaS entirely.
Competitive advantage and switching costs still protect large companies.
FAQ
Will artificial intelligence eliminate SaaS companies?
No. Most SaaS companies are still achieving strong revenue growth. What is happening is a market reassessment, not an industry collapse.
Why are SaaS stocks falling despite growth?
Often due to high investor expectations or risks from new strategies, not just because of artificial intelligence.
Can artificial intelligence replace tools like Adobe?
It may affect some simple uses, but professional tools are still essential for professionals and companies.
About Echo Media
Echo Media is a company specialising in digital growth strategies and artificial intelligence systems, helping businesses build sustainable growth engines through marketing, sales, and operations.
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