SaaS stocks rebound 20% YTD but AI infra dominates gains

The Gist

• DigitalOcean leads with 227% YTD gain as AI picks-and-shovels outperform
• Median SaaS company still down despite index-level recovery
• Klaviyo (-52%) and HubSpot (-46%) trail as martech lags
• Snowflake's 49% weekly jump shows AI-driven results moving markets

• SaaS stocks have rebounded 20% YTD, with AI infrastructure companies leading the gains.
• Companies in observability, security, and raw compute layers are thriving due to the AI buildout.
• The market is pricing software based on AI-defensibility rather than growth rate alone.
• Consumption-based businesses are outperforming seat-based models in the current regime.
• Great financial performance does not guarantee stock performance if the market questions the business model's AI exposure.
• The public market's re-rating of software multiples impacts private financing and startup valuations.

• Focus on building AI-defensible products that become more valuable as AI agents proliferate.
• Shift pricing models towards consumption-based or usage-based rather than seat-based to align with AI-driven trends.
• Prepare for increased scrutiny on AI exposure during fundraising, similar to public market valuations.
• Monitor public market multiples and trends to inform private financing and strategic decisions.

• 20% (Nasdaq's year-to-date growth in 2026.)
• 227% (DigitalOcean's year-to-date growth, making it the best performer in the group.)
• 76% (Datadog's year-to-date growth.)
• 55% (CrowdStrike's year-to-date growth.)
• 46% (HubSpot's year-to-date decline despite 23% revenue growth and 83%+ gross margins.)
• 22.7x (Forward software multiples at the March bottom, below the S&P 500 for the first time in the cloud era.)
• 3.1x to 3.4x (EV/revenue multiples at the March bottom, down from around 7x a year earlier.)