[DigitalToday reporter Chi-gyu Hwang (황치규)] Shares of enterprise software companies that had been falling as AI such as OpenAI and Anthropic spread have recently turned higher.

With collaboration software company Atlassian raising its annual outlook, a positive mood appears to be spreading across the software-as-a-service (SaaS) sector.

Attention is on whether this will lead to a weakening of the so-called “SaaSpocalypse” narrative that SaaS demand will decline because companies can build SaaS software directly with AI.

After its earnings report on May 1 (local time), Atlassian shares jumped as much as 25%. Shares of communications platform Twilio and Five9 also rose 20% and 16%, respectively, after posting what were described as impressive results.

Atlassian posted revenue growth of 32% from a year earlier in the latest quarter, while Twilio grew 20% and Five9 9%. For Atlassian, annual subscription revenue for AI-based service products topped $1 billion.

IndexBox said on May 4 that Atlassian’s share gains also lifted shares of peers such as Salesforce and ServiceNow.

Shares of hospitality and dining software specialist Agilysys rose 3.2%, and data infrastructure company Teradata also gained 3.2%. Vulnerability management company Rapid7 rose 3%. Teradata shares are down 7.1% from the start of the year.

Palantir Technologies also edged up after reporting results on May 4. Palantir’s first-quarter revenue was $1.63 billion, up 85% from a year earlier. It was the biggest annual growth rate on record and above market expectations. First-quarter net profit was $876 million, up fourfold from a year earlier. That also beat market expectations.

Palantir shares rose 1% in after-hours trading after the earnings report. The Wall Street Journal reported the move held up well as U.S. stocks fell broadly amid a worsening conflict in the Middle East. Palantir shares are up 18% from a year ago but are still down 13% compared with the start of the year.

Some analysts say conditions are in place for a rebound, as software company shares have underperformed the overall market.

Business Insider reported that AvaTrade chief market analyst Kate Leaman (케이트 리먼) said, “These earnings do not completely erase the SaaSpocalypse narrative, but they have created significant cracks,” adding, “This is not a move occurring in a structurally declining area.”

But Business Insider reported the results do not mean concerns about SaaSpocalypse have disappeared. Leaman said, “The SaaSpocalypse concern is not about the entire disappearance of the SaaS sector, but about a brutal polarization between winners and losers,” adding, “These results showed the winners, but the losers still exist.”