Software Trades Below the S&P 500 for the First Time in History. Two Trillion Gone.

IGV is down 24% in Q1. That's the worst quarter for software since 2008. But here's the number that stopped me cold: for the first time in modern history, software valuations have fallen below the S&P 500 multiple. SaaStr put the market cap destruction at roughly $2 trillion since the September 2025 peak. Software. The sector that's outperformed everything for two decades. Now trading at a discount to the broad market.

But zoom in and the story splits in two. ServiceNow's Now Assist is on track for a $1B run rate, making it the fastest product launch in company history. Half of their new bookings come from pricing models that don't use seat-based licensing. Salesforce Agentforce is running at $800M ARR. Both companies authorized massive buybacks, $50B and $5B respectively. Goldman Sachs surveyed institutional allocators and found 49% plan to increase software exposure, the highest figure since 2017.

Meanwhile, the Wall Street Journal published confidential financials from both OpenAI and Anthropic. OpenAI spends 4-5x more on training than Anthropic annually. Anthropic forecasts breakeven by 2028. OpenAI expects losses to balloon to three-quarters of revenue by that same year. The companies building the models that killed per-seat SaaS can't make money either. Not yet.

The pattern is obvious once you see it. Winners monetized AI as labor replacement. ServiceNow's "Pro Plus" tier charges 25-40% more and Fortune 500 companies are lining up because the AI actually does work humans used to do. Losers still sell seats to the humans being replaced. Israeli SaaS companies like Nice, Monday.com, and Wix lost tens of percent. 70% of providers admit AI costs eat their profitability.

If you're building a SaaS product right now, your pricing model isn't a business decision. It's a survival decision. Charge per seat and you're betting against the thing everyone's buying. Charge per outcome, per resolution, per task completed, and you're aligned with where $55 billion in buyback money says the market is going.