Podcast Summary: The Rundown – Deep Dive: The Software Selloff Explained
Date: February 14, 2026
Host: Zaid Admani (Created by Public.com)
Episode Theme:
Exploring the recent sharp decline in software (SaaS) stocks, the reasons behind the sell-off, the threat of AI to traditional business models, and whether the market reaction is rational or overblown.
Episode Overview
Zaid Admani discusses the “SaaS-pocalypse”—the severe underperformance and sell-off of software companies in 2026. He explains the historical appeal of the SaaS business model, how AI is threatening the sector’s fundamentals, the catalyst for the market’s fear, and perspectives from industry leaders on whether this is an overreaction or a justified repricing.
Main Discussion Points & Insights
1. SaaS: The “Perfect” Business Model (00:00–03:00)
-
Origins and Growth:
- Reference to Marc Andreessen’s 2011 prediction, “Software is Eating the World.”
- Software’s ubiquity: from CRM and payroll to niche sector tools (dental offices, construction, hospitals).
- Quote:
“Software really has eaten the world. Like how many times have you guys had a piece of software go down at work and it prevents you from doing your job?” – Zaid Admani (01:05)
-
Why Investors Loved SaaS:
- Subscription (recurring revenue) model; predictable cash flow.
- High customer “stickiness” due to difficulty in switching.
- Extremely high margins—once software is built, additional customers are almost all profit.
- Reference: Ben Thompson’s term “zero marginal cost.”
- Pandemic and low rates led to 2021 valuation peak (S&P Software Index forward PE of 50 vs S&P 500 at 22).
2. 2026 Selloff: What Happened? (03:00–05:00)
- Sharp Valuation Decline:
- S&P North American Expanded Technology Software Index’s forward PE drops below 20 for the first time.
- ETF IGV (100+ software firms): Down 20% YTD.
- Giants like Salesforce, Workday, ServiceNow, Intuit: Down over 30% in six weeks.
- Quote:
“…one of the worst sector crashes in modern market history.” – Zaid Admani (04:00)
3. AI as the Catalyst for the Panic (05:00–08:00)
-
Triggers and Fears:
- Release of Anthropic’s AI plugins (automating business tasks like contract review, compliance, finance research) caused panic.
- Concern: If AI agents can replace specialized software, demand for SaaS could plummet.
-
Deeper Threats to SaaS:
- AI reduces need for human workers = fewer SaaS seats/subscribers.
- Companies could use AI tools (like Lovable and Replit) to create custom internal software, bypassing traditional SaaS altogether.
- Counterpoint: Zaid believes these custom coding fears are “completely overblown.”
-
Emergence of AI-Native Competition:
- AI enables “nimbler” startups to build quickly and cheaply.
- Incumbents may have to lower prices—hurting margins and growth.
4. Is the Panic Justified or Overblown? (08:00–09:00)
-
Industry Voices Urge Caution on the Panic:
-
Jensen Huang (Nvidia CEO):
“There’s this notion that the tool in the software industry is in decline and will be replaced by AI. It is the most illogical thing in the world. And time will prove itself…” (06:35)
-
Ben Thompson (Stratechery): Existing software companies will use AI for faster development, not be replaced by it.
-
-
Wall Street’s Take:
- JP Morgan & Goldman Sachs say selloff is overblown.
- Recent earnings (Q4 2025) have remained strong—analysts predict 16.8% earnings growth for 2026.
-
Historical Parallel:
- Panic over Google Search being wiped out by ChatGPT “never happened”—Google search is still growing double digits.
- Zaid: “I think we're experiencing the same fear right now when it comes to software companies.” (08:30)
5. Why Most Firms Won’t “Vibe-code” Their Own Software (09:00–10:00)
-
Enterprise Realities:
- Businesses need reliability, security, compliance, and support—not feasible with DIY AI software.
- Upkeep of code, integration, and legal compliance are too complex for most companies.
- Quote:
“…if you’re a dental office, vibe-coding a custom patient tracking software that’s compliant with all laws seems like a massive headache and a waste of time.” – Zaid Admani (09:50)
-
Evidence: Even leading AI labs (OpenAI, Anthropic) continue using traditional SaaS (Slack, Salesforce, Workday).
6. Zaid's Take: A Healthy Repricing and a Buying Opportunity (10:00–10:41)
- Not the End—But a New Normal:
- AI throws uncertainty into established software models—expect heightened competition, lower prices/margins, fewer big winners.
- High-flying SaaS stocks were due for a valuation correction.
- Firms with “real moats and deep integration” will survive; key is identifying them.
- Quote:
“If you can identify the winners now, this sell off presents a fantastic dip buying opportunity.” – Zaid Admani (10:35)
Notable Quotes & Moments
| Timestamp | Speaker | Quote | |-----------|----------------|---------------------------------------------------------------------------------| | 01:05 | Zaid Admani | "Software really has eaten the world...how many times have you...had a piece of software go down at work and it prevents you from doing your job?" | | 04:00 | Zaid Admani | "...one of the worst sector crashes in modern market history." | | 06:35 | Jensen Huang | "There's this notion that the tool in the software industry is in decline and will be replaced by AI. It is the most illogical thing in the world." | | 09:50 | Zaid Admani | "...if you’re a dental office, vibe-coding a custom patient tracking software that’s compliant with all laws seems like a massive headache and a waste of time." | | 10:35 | Zaid Admani | "If you can identify the winners now, this sell off presents a fantastic dip buying opportunity." |
Key Segment Timestamps
- 00:00 – SaaS business models: why investors loved them
- 03:00 – Valuation history and 2026 crash timeline
- 05:00 – The impact of Anthropic’s AI plugin on sector sentiment
- 06:35 – Jensen Huang’s rebuke of the “AI replaces SaaS” narrative
- 07:30 – Wall Street and industry analysis on whether the panic is exaggerated
- 09:00 – Why most companies won’t build their own AI-based tools
- 10:00 – Zaid’s outlook: opportunities, risks, and the path forward
Conclusion
Admani concludes that while AI introduces real uncertainty and will pressure legacy SaaS models, the current sell-off appears exaggerated. Legacy software companies are unlikely to be replaced wholesale; rather, there will be a shakeout with a handful of strong winners. For savvy investors able to pick those winners, current prices could represent a compelling dip-buying opportunity.