Salesforce Results Spark SaaS Sector Rebound

Billionaire venture capitalist Chamath Palihapitiya has revised his stance on the software-as-a-service (SaaS) sector following Salesforce's impressive second-quarter results. In January, he warned of a 'Great SaaS Meltdown' and advised investors to value CRM's remaining performance obligations at zero due to AI-related risks.

However, after Salesforce reported 11% revenue growth, more than doubled adjusted EPS, and raised its fiscal 2027 revenue outlook, Palihapitiya now believes that software valuations could 'snap back.' The company's stock soared 23% on Thursday, marking its second-best session on record.

Palihapitiya pointed to Salesforce's results as validation of his May view that the SaaS sector was approaching a bottom. He argued that AI models and harnesses will require tight integration with systems of record to deliver their next phase of enterprise value.