AI risks do not justify blanket SaaS sell-off, says Schroders

Binaya Dahal

Journalist

9 April 2026

The software-as-a-service (SaaS) stock sell-off trend driven by concerns over artificial intelligence (AI) is not justified at a sector-wide level, Schroders’ Head of Private Equity Technology Investments, Michael McLean says.

He said while AI technologies will potentially reduce the number of seats for certain specific SaaS applications, a blanket sell-off across the industry is not warranted.

“Investors shouldn’t be writing off software altogether. But it is important to better understand where the risks sit, where the opportunities are, and taking a more selective approach in a rapidly changing environment,” McLean said.

McLean said the focus should be on how quickly companies can adapt, whether through product changes, pricing adjustments, or strengthening their competitive position.

“AI is changing so quickly, and we’re able to have almost a real time pulse on how it’s impacting the portfolio and strategy,” he said.

“There’s a clear benefit of early visibility into emerging technologies. Our long-standing involvement in venture investing provides insight into how quickly AI innovations are moving from development to real-world adoption, helping inform investment decisions.”

The asset manager noted that investor concerns have centred on the rise of so-called agentic AI, which can perform tasks autonomously and may reduce demand for traditional SaaS tools, particularly those reliant on per-seat pricing models.

But it urged investors to distinguish between scenarios where AI reduces usage and those where it replaces core products entirely and noted that the implications for valuations differ significantly.

Schroders Australia’s Head of Business Development, Claire Smith, said while AI is impacting some companies, this is not happening across the board and requires a more considered approach from investors.

“AI is changing the rules and businesses will come under pressure, but others will strengthen their position by embedding AI into their products,” she said. “Treating the entire sector as one ignores the reality that outcomes will be very different from company to company.”

Schroders said the broader message for investors is that AI is not a simple negative for software, but a force that is altering the sector in more complex ways.