2026 Predictions Series | Cloud & Software
Will AI be the Death of SaaS?
Out of all the questions that have emerged about AI, the most prominent to TBR has been: “Will AI be the death of SaaS?” Today, SaaS is far from dead, but it has reached an unmistakable inflection point. The model that reshaped enterprise software over the last 20 years has reached maturity just as a new layer of intelligence is forming above it. The result is a market that still depends on SaaS but no longer treats it as the strategic center of gravity. What once looked like a stable, compounding growth engine now looks more like baseline infrastructure supporting a different kind of workflow. As a result of this shift, the market is wondering whether SaaS applications will continue to define enterprise workflows or whether that role is shifting to AI-native platforms and agentic systems.
2026 Cloud & Software Predictions
Prediction: PaaS revenue will outpace SaaS revenue for cloud software vendors
Trend: Enterprise customers are focused on modernizing their SaaS estate, not adding new applications.
Driver: Market saturation, technical debt and an impetus to become AI-ready are pushing IT buyers to prioritize modern platforms.
Result: Traditional SaaS leaders will see their PaaS segment continue to vastly outperform their SaaS segment in revenue.
Prediction: SaaS incumbents will position SLMs as a foundational part of their AI strategies, lowering inference costs to scale adoption
Trend: SaaS leaders will throw their full weight behind AI strategies, often restructuring a large portion of their workforce toward the new technology.
Driver: Threats of disruption paired with promises of long-term opportunity push incumbents to pivot hard.
Result: SaaS incumbents establish broad agentic suites powered by proprietary small language models (SLMs), adding new use cases via internal and partner development, and slowly begin to monetize these platforms to the benefit of total revenue growth.
Prediction: The question “Will AI be the death of SaaS?” will likely remain relevant
Trend: The promise of SaaS disruption will not go away, but AI advancement over the next year will not be sufficient for making authoritative claims on whether SaaS’s role within the IT stack is truly diminishing.
Driver: Enterprise AI adoption will continue to scale quickly but not fast enough to suggest the demise of the SaaS model.
Result: Outstanding questions will remain unanswered as industry onlookers continue to grapple with the pace of change over the coming decade.
Technology Business Research, Inc.
Technology Business Research, Inc.