Key Takeaways
- Investor fears that AI would erode SaaS demand triggered a broad sell‑off dubbed the “Saaspocalypse” in early 2026.
- Goldman Sachs argues the reaction was excessive, noting that AI will create winners and losers rather than universal destruction.
- Figma and Atlassian have both posted double‑digit year‑over‑year revenue growth and are seeing rapid adoption of their AI‑powered features.
- Both companies now trade at attractive valuations, with forward price‑to‑sales ratios down sharply from their IPO levels.
- Despite short‑term volatility, the underlying fundamentals suggest upside potential for long‑term investors.
Overview of the Saaspocalypse
Artificial intelligence (AI) initially boosted tech stocks, but sentiment shifted dramatically in 2026. As Wall Street began to view AI as a disruptive force capable of supplanting many software‑as‑a‑service (SaaS) offerings, a wave of selling swept the sector. The phenomenon was labeled the “Saaspocalypse,” during which SaaS stocks experienced a widespread sell‑off driven by fears that AI would replace core functionalities and erode recurring revenue streams.
Goldman Sachs’ Assessment
Goldman Sachs believes the market’s reaction went too far. CEO David Solomon characterized the sell‑off as “too broad,” asserting that AI will not produce the sweeping destruction many investors dread. He was quoted as saying, “There’ll be winners and losers, and, you know, plenty of companies will pivot and do just fine.” This perspective suggests that the current discount in software stocks may represent a buying opportunity rather than a signal of lasting decline.
Why Figma Is Poised for a Rebound
Figma’s design software came under pressure when generative AI’s ability to create images and videos from text prompts raised concerns that its core product could be supplanted. The Saaspocalypse amplified these worries, pushing Figma’s share price down more than 50% between the start of 2026 and April 30. Nevertheless, the company’s fundamentals remain strong. In 2025, sales soared 41% year‑over‑year to $1.1 billion, fueled by new customer acquisition. Figma’s leadership emphasized that its AI integration is already paying off: “Figma’s AI tools are so powerful, my 10‑year‑old son used them to create a video game in a day.”
Figma’s AI Monetization Strategy
To capitalize on AI interest, Figma acquired Weavy, a platform that blends multiple AI models, allowing designers to select the optimal tool for each task. The firm has shifted from a pure subscription model to one that includes AI‑credit consumption. In Q1 of the prior year, no customers were using AI credits; now usage is ramping up, creating an incremental revenue stream. Management forecasts $1.4 billion in sales for 2026, representing double‑digit growth over 2025’s $1.1 billion, even before counting AI‑related income.
Valuation Appeal for Figma
The stock’s depressed price has improved its valuation metrics. According to YCharts data, Figma’s forward price‑to‑sales ratio has fallen substantially since its IPO last July, positioning shares at a much more attractive multiple. Coupled with robust top‑line growth and accelerating AI adoption, analysts view the current level as a compelling entry point for investors seeking exposure to a design‑software leader that is successfully integrating AI.
Atlassian’s Resilience Amid the Sell‑Off
Atlassian, which offers collaboration‑and‑project‑management tools, also suffered in the Saaspocalypse, with its stock dropping nearly 60% through April 2026. Investors worried that AI would reduce the number of seats—Atlassian’s primary revenue driver—by automating tasks traditionally performed by users. The company’s fiscal third‑quarter 2026 results, however, contradicted that narrative. Revenue reached $1.8 billion, a 32% year‑over‑year increase, demonstrating that customers are expanding, not contracting, their user bases.
Atlassian’s AI Product, Rovo
Parallel to Figma’s approach, Atlassian launched Rovo, an AI assistant that handles routine tasks, thereby boosting productivity. Rovo is priced on AI‑credit consumption, creating a fresh revenue avenue. In Q3, Atlassian reported that AI credit usage grew 20% month‑over‑month, signaling strong early adoption. Despite a Q3 net loss of $98.4 million (up from $70.8 million a year earlier, due to restructuring charges), the balance sheet remains solid: total assets of $5.7 billion, including $1.1 billion in cash and equivalents, and $4.8 billion in liabilities, of which over $2 billion is deferred revenue that will convert to sales as services are delivered.
Valuation Opportunity for Atlassian
The market’s overreaction has pushed Atlassian’s forward price‑to‑sales ratio to depressed levels. YCharts data show a pronounced decline in this multiple over the past year, suggesting the stock is cheap relative to its growth prospects. After releasing its Q3 results, Atlassian shares jumped 20%, indicating that investors are beginning to recognize the undervaluation. While the stock remains below its 52‑week high of $232.36 set in 2025, the upside potential appears considerable for those willing to look past the short‑term turbulence.
Investor Considerations
Before jumping into either stock, investors should weigh the broader market context and their own risk tolerance. The Motley Fool Stock Advisor service recently highlighted its top‑10 picks for the coming years; neither Figma nor Atlassian made that list, though the service’s historical average return of 968% vastly outperforms the S&P 500’s 202% gain. As noted in the disclaimer, Robert Izquierdo holds positions in both companies, and The Motley Fool recommends Atlassian, Figma, and Goldman Sachs Group.
Conclusion
The Saaspocalypse created a stark dichotomy: panic‑driven price declines on one hand, and solid operational performance coupled with accelerating AI adoption on the other. Goldman Sachs’ view that the sell‑off was excessive aligns with the evidence from Figma and Atlassian—both companies continue to grow revenue, are monetizing AI through credit‑based models, and now trade at attractive valuations. For investors who believe AI will augment rather than obliterate SaaS businesses, the current downturn may present a timely opportunity to acquire quality software shares at a discount. As always, thorough due diligence and a clear understanding of one’s investment horizon remain essential.
https://www.theglobeandmail.com/investing/markets/stocks/INTC-Q/pressreleases/1670976/goldman-sachs-says-the-artificial-intelligence-ai-software-sell-off-was-overdone-here-are-the-best-growth-stocks-to-buy-now/