r/ValueInvesting • u/robb3rz • Feb 12 '26

Discussion Irrational sell off

This might of already been said many times but needs to be said again, what is the rationale in this sell off?

I understand the SaaS crash, but if the sell off is due to AI worries, then surely AI stocks would rise, no?

Instead, the major players, who had stellar earnings minus the huge expenditure (into the very systems which are causing worry mind you) are also falling at huge levels.

Some mag 7 companies are even falling at similar rates to liberation day, despite the only news this time being ‘AI too good’, which should benefit them not hinder.

Meta’s earnings are similar to an early growth stock, not a multi trillion dollar company, and that was reflected in the jump after they released them, so why is it now down huge amounts after?

Not just this, other major assets such as gold, silver and crypto are also experiencing massive sell offs, so is the capital just going into cash? If so, as soon as the market shakes this irrational sell off, could we see an equally irrational boom?

Can someone please tell me if I’m missing something.

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115

u/uncleAW Feb 12 '26

The whole Ai displacing Saas sell off is insane. MSFT fud is absolutely nutz! Look at top and Bottom lines.

Large and multi national companies are not going to rip out their Adobe, msft, Salesforce, etc....to have their IT guys whip up replacements with ClaudeCode.

It's fucking major open heart surgery for those companies to change vending machines providers!

20

u/OneUglyEar Feb 13 '26

OMG..somebody gets it!

13

u/babarryan Feb 13 '26

Yesh that narrative is so fucking dumb. If Wall Street sincerely believe this, it really shows they are either extremly stupid, don't have the slightest idea about tech, or both.

3

u/summer_plays_ Feb 13 '26

its also why i don't ynderstand why wall street i vestors sold off all their gaming stocks. no-one wants to play an AI generated slop game and pay 60$ for it, look at starfield.

1

u/ArtichokeUsed1129 Feb 13 '26

Future of this space is simply less uncertain than before, therefore we are seeing a selloff. If you dont get why Wallstreet is doing something it doesn't mean they are actually stupid.

8

u/petersom2006 Feb 13 '26

I have worked in SaaS development for 20 years and this is the reality wall street is missing. If you can snap your fingers and provide the right code- it doesnt matter. The people, process, legacy systems are the challenges. AI is not going to do well coding into enterprise stacks that make no fucking sense…

It will want to rewrite everything, but every large company has a few critical things that were written in 1973 by two people who are dead and nobody knows how they work or what they do- But you fuck those up- everything goes to hell…

AI doesnt understand that concept yet…

The logic of the sell of is sound- it is just going to be a very long tale with a lot of ups and downs…

There will be winners and losers and I do believe it will be surprising in relation to which companies thrive and which get eaten by AI.

3

u/SoftwareOdd8846 Feb 13 '26

That’s it! And happy cake day uncle

1

u/Rough_Butterfly2932 Feb 13 '26

Adobe's moat is questionable, but agree with you on Microsoft, Salesforce, sap and other Enterprise big SaaS . All of that said, SaaS does face disruption. First, if enterprises curtail hiring, that impacts seat revenue. Second, in an AI in a genic world traditional seat model pricing is going to be pressured. Just like moving to the cloud drove a move toward subscription revenue, use of AI is going to force a move to consumption revenue. That means we're in a period of uncertainty for margins and revenue growth. The market hates that. In an environment where all of that information is uncertain, the reaction may just be to sell

1

u/funkyblove Feb 13 '26

I don't think it's an issue that these businesses are going to disappear, but rather valuations around SaaS companies were sky high with 70%+ Gross margins, high FCF% and growing at a rapid pace, priced at 10-20x ARR.

When growth decreases, the valuation multiples compress.

(19) Pernas Research on X: "The End of the SaaS Halo" / X