Could AI Disruption Fears Trigger a Software M&A Boom?

In this week's episode of WSJ’s Take On the Week, co-host Miriam Gottfried and guest host Dan Gallagher, a tech columnist for Heard on the Street, chat with Jefferies software analyst Brent Thill about the recent turbulence in the business software market. They talk about the growing fears that AI will replace the need for traditional software-as-a-service, or SaaS, platforms like Intuit, Salesforce, and Workday. They analyze how the narrative around AI "vibe coding"—where businesses generate their own apps using simple text prompts—has led to a sharp selloff in cloud software stocks. They also note other factors weighing on the sector, including tech layoffs and the shift away from seat-based software pricing models and toward consumption-based metrics. After the break, Thill explains why he thinks the market's fears over AI disrupting major enterprise software are overblown. They explore why large companies won't trust AI with critical systems for payroll, accounting or taxes. Then Thill makes the case for why AI infrastructure and security companies remain safe bets, and why the current tech selloff and depressed valuations are setting the stage for a massive tech M&A boom driven by private-equity firms. This is WSJ’s Take On the Week where co-hosts Telis Demos, Heard on the Street’s banking and money columnist, and Miriam Gottfried, WSJ’s investing and wealth management reporter, cut through the noise and dive into markets, the economy and finance—the big trades, key players and business news ahead. Have an idea for a future guest or episode? How can we better help you take on the week? We’d love to hear from you. Email the show at takeontheweek@wsj.com. To watch the video version of this episode, visit our WSJ Podcasts YouTube channel or the video page of WSJ.com Further Reading Threat of New AI Tools Wipes $300 Billion Off Software and Data Stocks AI Won’t Kill the Software Business, Just Its Growth Story What You Need to Know About the AI Models Rattling Markets Meta Overshadows Microsoft by Showing AI Payoff in Ad Business Thoma Bravo’s $34 Billion Fundraising Haul Bucks Private-Equity Slowdown IBM Strikes $11 Billion Deal for Confluent For more coverage of the markets and your investments, head to WSJ.com, WSJ’s Heard on The Street Column, and WSJ’s Live Markets blog. Sign up for the WSJ's free Markets A.M. newsletter. Follow Miriam Gottfried here and Telis Demos here. Learn more about your ad choices. Visit megaphone.fm/adchoices