In the rapidly evolving landscape of software-as-a-service (SaaS), artificial intelligence is not just an enhancer—it’s a disruptor that’s reshaping valuations, business models, and market dynamics. As we move deeper into 2025, industry analysts are warning that AI’s advance could accelerate mergers and acquisitions, with depressed stock prices making once-high-flying SaaS companies attractive targets for buyers looking to consolidate or pivot toward AI-native solutions.

According to a recent report from RBC Capital Markets, highlighted in Business Insider, AI disruption is depressing valuations across the software sector, potentially sparking a wave of M&A activity. The report identifies several SaaS firms as prime acquisition candidates, including Asana, GitLab, and Zoom, which have seen their market caps shrink amid investor skepticism about their ability to adapt to AI-driven changes.

The Valuation Squeeze from AI Advances

RBC analysts note that the median enterprise value-to-revenue multiple for software companies has dropped significantly, from a peak of 15 times in 2021 to around 7 times today. This decline is attributed to AI’s potential to commoditize traditional SaaS functions, such as project management and collaboration tools, by automating workflows that were once manual.

Posts on X from industry insiders echo this sentiment, with discussions pointing to AI agents replacing rudimentary SaaS applications. For instance, sentiments shared on the platform suggest that legacy SaaS is vulnerable as AI enables full job automation, potentially rendering tools like basic CRUD databases obsolete.

Spotlight on RBC’s Top Targets

Among RBC’s picks, Asana stands out with its project management software, but its valuation has been hit hard by AI competitors offering automated task handling. The report from Business Insider quotes RBC analyst Rishi Jaluria saying, “We believe AI disruption could lead to increased M&A activity as valuations remain depressed.” GitLab, a DevOps platform, is another target, with its open-source roots making it appealing for acquirers aiming to integrate AI coding tools.

Zoom, the video conferencing giant, is also flagged, despite its pandemic-era boom. Analysts argue that AI enhancements in communication could be bolted on more effectively by larger players like Microsoft, which has already integrated AI deeply into its Teams platform.

Broader Industry Shifts Driven by Agentic AI

A report from Bain & Company delves into how agentic AI—systems that can autonomously perform tasks—poses an existential threat to traditional SaaS. The piece states, “Disruption is mandatory. Obsolescence is optional,” emphasizing that companies must evolve or risk being sidelined.

Similarly, an article in Harvard Business Review explores generative AI’s role in transforming SaaS into dynamic, goal-oriented environments. It notes that this shift will offer “significant efficiency gains and new opportunities for innovation,” urging leaders to focus on governance and strategic responses.

M&A Momentum in a Depressed Market

Recent news from Communications Today highlights how Big Tech’s AI dominance is disrupting traditional IT and SaaS models, with firms like Microsoft and Amazon leading gains while legacy players struggle. This has led to a 78% jump in software M&A deals this year, as per industry tracking.

Posts on X further illustrate this trend, with venture capitalists and founders discussing how over 60% of global VC funding now flows to AI-native startups, leaving traditional SaaS in a funding drought. One common theme is the prediction that AI agents could create the first trillion-dollar SaaS company by fully automating jobs.

Valuation Multiples and Sector Hotspots

A blog from saas.group analyzes AI valuation multiples, identifying sectors like data infrastructure and analytics as commanding premiums in 2025 M&A. It advises mid-market founders to position for premium outcomes by integrating AI early.

McKinsey’s 2025 AI survey, detailed in McKinsey, reveals that 88% of organizations use AI in at least one function, up from 78% last year, but scaling remains a challenge for two-thirds of them. This underscores the opportunity for acquirers to buy and scale AI capabilities.

Emerging Trends in AI-SaaS Integration

An article from Corpsoft.io outlines key trends, such as AI boosting marketing through real-time optimization. It predicts that AI strategies will be crucial for SaaS survival in 2025.

Meanwhile, Analytics Insight lists top AI SaaS companies leading with automation and LLMs, redefining scalability and growth. This contrasts with traditional players, fueling acquisition interest.

The Role of Low-Code and Democratization

A Medium post, as reported in recent web searches, discusses how low-code tools combined with AI are democratizing SaaS development, allowing non-tech users to build products quickly. This could further pressure incumbent SaaS firms by lowering barriers to entry.

From WebProNews, AI’s dominance in 2025 includes agentic systems and sustainable innovations, with investment opportunities in AI infrastructure highlighted in various X posts.

Strategic Responses and Future Outlook

Industry leaders are advised to rethink their approaches, as per RIB Software, which explores SaaS trends disrupting industries like construction in 2025. Integration strategies are key, with 91% of product leaders saying they drive significant value, according to a Workato report shared on X.

Ultimately, the convergence of AI disruption and M&A activity points to a transformative year ahead, where adaptability will separate winners from acquisition fodder in the SaaS arena.