The CEO of a tech advisory firm is warning that artificial intelligence will drive a sweeping consolidation in the software sector, putting thousands of companies at risk.
In a Fox Business interview, Futurum chief executive Daniel Newman says the broader AI boom is fueling massive investment in infrastructure and data tools.
But he warns that companies that don’t have a strong enough business model or unique use cases will likely vanish as AI reconfigures workflows. Specifically, he’s looking at software-as-a-service (SaaS) companies, which he predicts will be consumed by the accelerating AI wave.
SaaS firms rent software over the internet for tasks like HR, payroll, sales, and marketing. Newman says they face a squeeze as giants such as Salesforce, Microsoft, and ServiceNow pour billions into AI, while data players like MongoDB, Snowflake, and Pure Storage become essential for making AI work.
“Yeah, there are two trends, though. There is the AI eating software. And then there are the SaaS companies that are going to still be very successful. And MongoDB is one of them.
See the difference is that there’s the enterprise software, the CRMs (customer relationship management) and ERPs (enterprise resource planning) that are very difficult for people to use. The companies that basically make your enterprise software, and then there’s the data end of it, the Snowflakes, the MongoDBs, the Pure Storage, that company’s ripping 30% [last week] because those companies are still going to be needed for all this NVIDIA, for all this Google and all this AI that we’re going to need to run in the enterprise. We’re going to need safe, compliant, governed data…
But I do think some of the smaller ones, I predict somewhere around a third to half of SaaS companies today will either be, they’ll either be acquired or they won’t exist in about three years.”
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