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Daily Pulse · · 09:00 CET · macro · IGV

A glowing blue stack of SaaS application panels — cloud, dashboards, user, charts — standing on a cracking stone pedestal, a red rising rate-percent arrow climbing on the left and a red price chart falling on the right, under a stormy sky.

Why Another Leg Down in SaaS and Software May Be in the Making

Thomas Look, Managing Director of Closelook Venture GmbH

By Thomas Look

AI-assisted, human-reviewed

The first leg down in software was about duration — how far out investors were willing to discount its cash flows. The second, if it comes, is about something more dangerous: the earnings themselves becoming less certain just as the discount rate climbs again.

The first leg was about duration

The market did not immediately decide that all software earnings were impaired. It decided that those earnings could no longer be discounted with as much confidence as before. AI introduced uncertainty around product durability, pricing power, competitive moats, seat-based models, and long-term customer retention. As a result, investors shortened the valuation horizon they were willing to assign to future software cash flows.

Global X Cloud Computing ETF weekly candlestick chart showing a multi-year trading range since the 2021 peak, with lower highs and rising lows converging.
Figure 1. Global X Cloud Computing ETF (CLOU), weekly. Software’s first derating in one picture: a multi-year range since the 2021 peak — lower highs grinding against rising lows — while earnings held. The duration discount, doing its work slowly.

Software stocks derated while earnings held up. That was derating step one.

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AI Handoff Board Nine ratios of our own indices tracking whether AI leadership is moving from build to operate to use. Open the board →
The signals behind this Each line links to the tool it comes from
Index Rubin 100 — the AI build-out: the hardware and infrastructure that monetizes the arms race rather than its final winner Macro Rates X-Ray — the belly of the curve, the discount rate that actually prices long-duration software Lab Beta Instability — how violently the software complex now moves versus the Nasdaq Research SaaS valuation decomposition — dial duration, rates and earnings and watch the price move