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Claude Code adoption accelerated in December–January, triggering a…

2026-06-16 · 13:59 UTC ·@sandykory ·2 min read

Brief

@sandykory argues the early‑2026 'SaaSpocalypse' was momentum‑driven after Claude Code's Dec–Jan surge, not evidence of failing SaaS fundamentals: Q1 results were historically strong and churn hasn't risen. She notes WCLD fell ~30% by April but was only down 3% YTD by mid‑June, and maintains AI is overall net positive for legacy SaaS while acknowledging real disruption risks.

Why it matters

Claude Code adoption accelerated in December–January, triggering a momentum-driven SaaS selloff in January despite no clear deterioration in fundamentals; Q1 earnings were strong by historical standards.

Key details

  • WCLD (cloud ETF) was down ~30% year-to-date in April but had rebounded to only down 3% YTD by the June 16, 2026 post; the expected canary-in-the-coalmine—elevated churn—has not appeared in the data.
  • @sandykory's stance: AI is likely net positive for legacy SaaS growth (boosting software production and leaner ops) but creates concentrated risks—Anthropic could dominate, customers could in‑source, and AI-native startups could disrupt—producing greater mean‑median dispersion of outcomes.
Source evidence

A few months ago, we were deep in the SaaSpocalypse. SaaS stocks got crushed. Why? Because AI. AI is only getting smarter, yet public company Q1 results show SaaS fundamentals remain strong.

Hindsight’s 20/20. Now, we can look back at December or January and see Claude Code really taking off. Public SaaS stocks started to get slammed in January. The narrative of AI threatening legacy software made for an easy justification.

But public markets these days are very momentum-driven. The SaaSpocalypse narrative didn't really need actual evidence of deteriorating SaaS fundamentals to smash SaaS stocks.

But if the AI threat narrative is real, it will have to show up in data. The most likely canary in the coalmine? Elevated churn. If AI is going to kill legacy SaaS, legacy SaaS will start losing customers. Maybe due to customers rolling their own software, or maybe AI-native startups eating their lunch. But neither of those potentialities has shown up in the data.

The earnings announcements in Q1 were strong by historical standards.

Not coincidentally, SaaS stocks have rebounded. WCLD, my favorite cloud ETF to track, is now down just 3% on the year. Not great, sure. But much better than down 30% on the year, as it was in April. There’s still plenty of time for AI to run over SaaS, but I’m more interested in real-time data than scary narratives. The latest data for SaaS fundamentals, despite AI fears, is pretty good.

My original view was that AI was net positive for the growth prospects of legacy SaaS. I continue to think that’s the case. AI will boost software production and enable leaner operations. That said, AI creates plenty of risks–Anthropic could run the table, customers could in-source, AI-native startups could disrupt legacy SaaS. But I don’t think it’s zero-sum. Many winners are possible. Granted, I have no idea which direction stock prices will go from here.

Here’s an uncomfortable fact: like all technology, AI creates inequality. Everyone will be better off on average, but we’ll see increased dispersion of outcomes across just about every dimension. Applied to software, there's a mean-median issue where the mean software company might strongly benefit, but the median might benefit as much, and maybe even get hurt a little bit.

I'm very open-minded because it is a really unusual time. I’m ready to update my priors. But so far, I don't see evidence to change my general views on SaaS vs AI.