The press around AI putting pressure on well-established SaaS companies is gaining some momentum.

Note: We are not discussing specific stocks and valuations. Our focus is on the impact of AI on software companies.

Analyst Ratings Published 08/11/2025…

“Melius Research downgraded Adobe… warns of ongoing multiple compression for software-as-a-service companies… ‘AI is eating software’ …”

AI isn’t a shiny add-on anymore. It’s like a sneaky wave that’s pushing SaaS valuations lower. Investors see that and say: This might be more than a passing trend.

“Redburn-Atlantic downgraded shares to Sell, warning that generative AI tools are eroding the company’s competitive advantage …”

When analysts note genAI is eating away at your moat, that’s a red flag. For product folks, that means no more resting on past glory. You have to rethink the value your product brings.

On a related note:

“Atlassian laid off about 150 employees… AI will replace many support and operations roles to cut costs and boost efficiency.”

Jobs are vanishing because AI can now handle repetitive tasks.

For us on the product side, that points to two things: rising expectations for automation and shrinking tolerance for any friction.

These moves aren’t just headlines. They reflect a shift in how markets see SaaS. Using Adobe as an example, there are several software companies facing similar scrutiny.

When AI starts chiming that its tools can do your job faster or cheaper, investors get jittery. That changes how product managers should think: it’s no longer enough to polish features. AI-first competitors or internal automation can upend your roadmap in weeks.

The message from Wall Street? If the AI around your space is improving fast, your users could be just one model away from switching. And it’s not just about competition—it’s about cost, integration, and perceived value. If your AI isn’t sticky, it’s replaceable.

For product leaders reading this, here’s what’s buzzing in the market:

  • Valuation risk is real, even for heavy hitters. If you don’t keep your competitive edge, investors will punish multiples fast.
  • Expect AI to be a force multiplier or a replacement. Your value-props need to lean into what only you can do—be it deep domain context or specific workflows.
  • Speed matters. Markets are reacting now, not in some distant “AI future.” You’ve got to move on to experiments, integrations, or whatever keeps your product relevant.

This isn’t about doom-scrolling or hype. It’s about reading the room. Adobe’s drop says investors are cautious. Atlassian’s restructuring signals that internal teams are already adapting to AI. By now, you should all be seeing these shifting trends in your product areas and business.

As product managers, those aren’t distant storms—they’re the new normal.