AI Disruption Fears Trigger Sell-Off of SaaS Stocks

A broader market sell-off of high-multiple internet and Software-as-a-Service (SaaS) stocks has led to significant share price declines for several major providers. ServiceNow saw its share price fall nearly 50% below its previous record high, driven by investor concerns that artificial intelligence will disrupt the traditional SaaS model. To signal confidence, CEO Bill McDermott purchased $3 million in company stock and executives halted scheduled stock sales.

Other companies experienced similar volatility. DoorDash shares dropped roughly 38% from an October 2025 peak, coinciding with regulatory challenges in Seattle, despite reporting fourth-quarter 2025 revenue of $29.7 billion. Toast shares plummeted 44% from an August 2025 peak, even as the company reported an annualized recurring run rate growth of 26% year over year to $2 billion by the end of 2025.

The volatility follows predictions from Mistral AI CEO Arthur Mensch that over half of current IT spending on SaaS will shift toward AI. In response to these trends, McDermott has characterized enterprise AI as a primary driver of returns for the massive investment cycle in AI infrastructure.