New market order as SaaSpocalypse recedes

Wed 24 June 2026
6 MIN READ

Alexandra Cain

Freelance Finance Journalist

Tech stocks plummeted in early 2026 as investors reconsidered their software as a service (SaaS) exposures, as superior AI challengers shook down established business models. While the market is recovering, shareholders continue to deal with everything from oil shocks and geopolitical upheaval to inflation surprises.

Listed companies can be collateral damage, caught in the market’s crossfires even if their fundamentals remain sound. In this Listed@ASX roundtable, we explore:

how investors view today’s markets,;
what this means for their portfolios; and
what they expect from ASX entities.

ASX market commentary on SaaSpocalypse receding

Alexandra Cain, editor, Listed@ASX: With heightened geopolitical tensions, inflation uncertainty and policy risk, how are you thinking about pricing ‘unknown unknowns’?

Damian Fox, Partner, Carthona Capital: We think about what the market might be doing two, five or 10 years down the track. If I think about the risks we're taking in the investments we're doing, where the market sits right this second due to geopolitical tensions, inflation uncertain or policy risk, is only one bit of a much larger risk consideration.

Armina Rosenberg, Co-Founder, Minotaur Capital: The way we approach unknown unknowns is through diversification. We usually have around 60 stocks long and 15 short, and with AI, you can get into a more structured scenario analysis and get to the second, third and fourth order derivatives of macro shocks. As an example, when the Iran crisis happened, we asked our software to figure out what would happen to each stock in our portfolio. We were short Mitsubishi Motors and the software said it would be punished in two ways: one with the rise in oil prices and two with the transition to EVs. It helped us think deeply about that situation.

Damian: The world is going to look completely different in six months, let alone two or five years. It's pretty hard to know which is the right vertical or business model now, so agree with Armina’s comments about the importance of diversification.

"With the pace and impact of AI we often don't know what's going to happen next month with some of these companies and that's difficult to navigate."

Amit Verma, Senior Manager, Listings, ASX: I think it’s a combination of fundamentals and market opportunity. There has definitely been a compression in terminal values timelines and that’s exactly what we have seen with SaaS companies. Previously, when investing in SaaS companies, you had ten to 15 years, or more, when considering terminal values. Now, with the pace and impact of AI, we often don't know what's going to happen next month with some of these companies and that's difficult to navigate.

Listed@ASX: Does this mean you approach stock selection and portfolio construction in a different light?

Damian: Funds have their mandate and have raised capital on a certain basis. We are a relatively small fund, and we can’t turn around and write a A$10 billion cheque. So we have to think about the most efficient way for our amount of capital to get exposure to a thematic or sector or fundamental opportunity. So yes, there is diversification, but you are constrained by what you've raised capital to do, the amount of capital you have and the strategy you have.

Armina: There's going to be a premium on authenticity from now on. Big hedge funds already run bots over earnings calls to figure out what AI techniques the company used on its earnings and how they have tried to gamify the AI. Authenticity is going to resonate a lot more with investors and investors are going to become a lot more savvy as to what's authentic.

If you're a beaten-up SaaS company and you really believe in your long-term prospects, buybacks are a good way to signal you still believe in the story. With SaaS companies, the results aren't yet reflecting the impact of AI on their businesses, because enterprises are slow to adopt new technology. This is likely to be reflected more so in earnings a year out from now.

Damian: When the SaaSpocalypse correction happened, the entire tech sector corrected, even businesses that have a massive positive opportunity from AI traded down. It feels like the market's still trying to work out who's going to be the winner, who's going to be the loser and which one should trade better in this environment.

"Authenticity is going to resonate a lot more with investors and investors are going to become a lot more savvy as to what's authentic."

Armina: That terminal value point is nuanced. That almost had to happen because the terminal values were being baked into perpetuity, and now the terminal value of any software or technology company is max five years, given the level of uncertainty and pace of innovation with AI.

Listed@ASX: What do you want listed companies to communicate around that sort of thing?

Armina: Evidence they are using AI in their own processes goes a long way.

Listed@ASX: How should companies consider AI in capital allocation and balance sheet discipline and what do you expect them to communicate around that?

Futuristic ‘AI’ text surrounded by digital charts and data visualisations, representing artificial intelligence in financial markets.

Damian: There's two sides to it. On one side, if AI is creating a massive opportunity for growth, then of course you want them to be going after that ASAP. But there are so many unknowns. If Anthropic comes out with a new product and suddenly the world changes, you want to make sure they've got capital and runway to make sure they can adjust their strategy, so it's a careful balance.

Given the uncertainty, you need to be retaining more cash on the balance sheet because the change we're seeing is bigger than the 90s. There's going to be opportunities as well as threats and businesses that have an existential problematic threat from AI need to be deploying capital ASAP to try to stop that risk.

Armina: That's the counterpoint to the buyback point I made earlier. If you're seeing a way to grow through AI, then you should be spending on that, but then you also need some firepower. Capital allocation is the most difficult it's ever been.

Damian: Meanwhile, Google does a dividend. It's a flex, isn't it? They’ve got a business that spits out so much cash that even after throwing huge amounts of capital at the AI opportunity, they've got the physical infrastructure, the LLM, the data centres, the TPUs, the consumer products, the capital and the team – that they can still issue a dividend.

Listed@ASX: What’s your perspective on SaaS businesses now?

Armina: I think the time to sell the whole sector is over, but I also don't think it's the time to be wholesale buying either. From a market sentiment perspective, it's still quite negative. The last round of results really helped, but people are trying to decide whether agents replace or use the software.

Damian: If what makes something SaaS is the fact they've got a contracted, recurring revenue from software, then there is of course value there. Certain businesses have contracts out for 12, 24 or 36 months ahead. That does give you revenue certainty and that leads to a bigger multiple – and stems the risk of disruption through AI. So there is value in that type of thing. The question therefore is, whether in the world of AI, they can continue to charge to revenue that they historically have.

"I think the time to sell the whole sector is over, but I also don't think it's the time to be wholesale buying either."

Amit: SaaS businesses were great as they had very predictable revenues off which to base valuations. With AI impacting businesses as it is, it’s now more a case of what 'moats' do these companies have – proprietary data, distribution, regulatory moats and/or vertical expertise. If you're a traditional software company, if you want to raise money on an ongoing basis, it comes down to how strong your AI narrative is – how you are defending against AI eroding your business and simultaneously, how you are going to use AI to materially grow the business . If you don't have a strong narrative, I think you're going to really struggle.

Armina: Hardware is having more of a time now. Back in 2016/2017, any hardware start-up in Australia wasn’t able to get a meeting. It was only really maybe three or four VCs in the deep tech space that had an interest in that area. It is totally different now where everyone is looking for hardware backing, the equivalent of the HALO (Hard Assets Low Obsolescence) trade in the listed world.

Damian: It will be interesting to see what happens on tokens. Everyone's paying for tokens at the moment. The question is whether it stays like that.

Amit: AI is very useful, but it's not cheap and often involves significant cost.

Jessica Davenport, Manager, Listings, ASX: With all the volatility, what constitutes value in today’s market?

"We're ultimately investing in entrepreneurs, and the very best entrepreneurs are very good at navigating these types of environments."

Armina: It depends on what you term value. People think memory is overvalued at the moment, those stocks still trade on eight times earnings. In the past memory was very cyclical, almost commodity-like. Now AI is a structural demand driver for memory and it's the biggest position in my portfolio.

Damian: Our business model is you're going to make a whole bunch of bets, a lot of them are going to fail, a lot of them are going to go mediocre and your big returns in your fund are made by the handful that do really, really well. So, where there's high volatility, the probability of failure has gone up, but the probability of supersized returns also increases – and so we should be net/net better off.

We're ultimately investing in entrepreneurs, and the very best entrepreneurs are very good at navigating these types of environments. In fact, they've proven they're better than big incumbents. When they recognise that AI is bringing a threat, they're going to get up, get on the front foot and navigate around that, and the good ones are going to succeed there and hopefully we can help them navigate that journey.