More Buying, SaaS Commentay

 

The SaaS-pocalypse and the Cost of Indiscriminate Fear

There’s no denying it: we’re in the middle of a SaaS-pocalypse. The market is pricing many software companies as if they won’t exist by the end of the year. Multiples have compressed, sentiment is bleak, and anything even tangentially exposed to AI disruption is being treated as guilty until proven otherwise.

But markets hate uncertainty more than they hate bad news. And when uncertainty peaks, discernment often disappears.

Instead of separating which SaaS businesses have durable moats from those that don’t, the market is selling indiscriminately. The assumption seems to be that software is now trivial to replicate — that you can simply “vibe-code” your way to an enterprise-grade replacement. In my view, that dramatically understates how hard it is to build, deploy, and maintain software at scale, especially in mission-critical domains.

Take cybersecurity. Replacing a core security platform isn’t like swapping out a productivity tool. The operational disruption alone is enormous. The risks are asymmetric and severe. One misstep can expose an organization to catastrophic outcomes, reputational damage, and regulatory fallout. That’s why companies place such a premium on pristine track records and deeply embedded systems.

Ironically, large language models may increase certain risks. Autonomous agents and AI-driven systems can introduce new attack surfaces and potential back-door vulnerabilities. In that environment, single-point solutions are likely the most fragile. By contrast, full-stack platforms and infrastructure-level companies — especially those that the internet itself depends on — are structurally better positioned to adapt and endure.

None of this is to deny the uncertainty. It’s real. Business models will change. Some SaaS companies will fail. But I’m not operating from the assumption that all SaaS is doomed, or that enterprises are eager to abandon deeply integrated systems with long histories of reliability for unproven alternatives.

For that reason, I’m treating the recent drawdowns as opportunities. I’m adding aggressively, particularly in cybersecurity, where switching costs, trust, and execution matter most. The market may be pricing extinction. I see a repricing of fear.

And when fear is indiscriminate, that’s often when long-term investors should be most discerning.

These are companies, I believe, that, among SaaS, cybersecurity is more robust due to the cost of failure. The two strongest moat SaaS companies in the portfolio are CRWD and NET.

Anchor Stock Adds

MSFT x1 at $404

ABNB x5 at $119

MA x1 at $537

Growth Stock Adds

NET x2 at $189

ZS x1 at $171

SE x2 at $163

DDOG x2 at $127

ZS x1 at $171

Marlin Sandlin owns shares of MSFT, ABNB, MA, NET, ZS, SE, DDOG, and ZS.

This website is created and authored by Marlin Sandlin and is published and provided for informational and entertainment purposes only and merely cites my own personal opinions.  I am not a financial advisor, and this website is not intended to constitute investment advice or provide specific advice or recommendations for any individual or on any specific security or investment product.  Any action you take upon the information you find on this website is strictly at your own risk.  This website may share links to articles and information which is interesting to me, but it is in no way an endorsement by me or by anyone associated with me.  The views reflected in the commentary are subject to change at any time without notice.   I may or may not hold investments in the companies or securities discussed on this website.This website is created and authored by Marlin Sandlin and is published and provided for informational and entertainment purposes only and merely cites my own personal opinions.  I am not a financial advisor, and this website is not intended to constitute investment advice or provide specific advice or recommendations for any individual or on any specific security or investment product.  Any action you take upon the information you find on this website is strictly at your own risk.  This website may share links to articles and information which is interesting to me, but it is in no way an endorsement by me or by anyone associated with me.  The views reflected in the commentary are subject to change at any time without notice.   I may or may not hold investments in the companies or securities discussed on this website.