Tech Titans Tumble: Salesforce, Adobe, and ServiceNow Plunge Over 30% Since 2025
The once-unshakeable pillars of the enterprise software world are showing cracks. A brutal market re-evaluation has hammered the sector's biggest names, with three giants taking a particularly heavy hit.
What's Behind the Slide?
It's not just a bad quarter—it's a fundamental shift. Legacy SaaS models built on hefty, recurring license fees are facing unprecedented pressure. Investors are asking hard questions about growth saturation, margin compression, and the sheer cost of maintaining these sprawling digital empires. The old playbook of 'land and expand' is getting a brutal rewrite.
The New Competitive Landscape
While the old guard stumbles, a new wave of agile, modular, and often blockchain-integrated solutions is gaining ground. Think decentralized data protocols that bypass the traditional CRM middleman, or smart-contract-powered automation that makes monolithic platforms look clunky. The market isn't just correcting; it's pivoting.
A Reality Check for Traditional Tech
This isn't a blip. A loss exceeding thirty percent of market value signals a deep-seated skepticism about the future profitability of these business models. It's a classic case of Wall Street finally doing the math on diminishing returns—usually about two quarters after everyone in the tech trenches saw it coming. The era of easy growth on legacy architecture is over.
The message is clear: in today's digital economy, size and brand name alone aren't enough. Agility, efficiency, and true technological innovation are the new currencies. For the traditional tech titans, the only way out of this hole might be to stop digging with the same old tools.
The software boom that was
Throughout the 2010s, software appeared to fulfill Marc Andreessen’s prediction that it would “eat the world.” Fast internet connections and cloud computing powered the expansion. Companies could rent storage from providers like Amazon.com instead of maintaining their own data centers.New software ventures sprouted up everywhere
They tackled everything from yoga studio scheduling and payment processing to corporate cybersecurity defense.
Wall Street’s view of the sector transformed completely. Once considered risky, software earned a reputation for dependability. Companies rarely switched products after integrating them into their operations. Long-term subscription deals brought predictable income streams. Investors valued that highly.
Stock prices climbed sharply. The sector attracted floods of borrowed money as private equity firms rushed to buy companies. Remote work requirements during the pandemic sent the boom into overdrive. Falling interest rates made borrowing cheaper, which added fuel.
Things started changing when rates climbed in 2022, and workers returned to offices.
Lenders who had funded software acquisitions began seeing cracks. Competition intensified. Companies carrying heavy debt loads started struggling.
Software loan defaults were virtually unknown before 2020. That was partly because lending to such companies was relatively new. Over the past two years, however, 13 software businesses have failed to meet their debt obligations, according to PitchBook LCD. That includes both bankruptcies and out-of-court debt restructurings.
Quest exemplifies the challenges. The company makes OneLogin software for employee authentication. Clearlake Capital purchased Quest in early 2022 using $3.6 billion in investor loans. Despite benefiting from remote work trends, Quest buckled under its debt burden while facing competition from Okta, a larger rival. The company reached a restructuring agreement with lenders last June.
Growing investor caution
Default rates for software loans remain below those for buyout loans overall. Investors haven’t fled entirely. But the premium that investors demand for holding software loans above benchmark rates has climbed over the past 15 months. That’s happened even as overall loan premiums edged downward, according to PitchBook LCD data seen by WSJ.
“The investor base is definitely scrutinizing these software names much more closely,” said Vince Flanagan, who manages portfolios at Seix Investment Advisors.
AI’s emergence has deepened the caution. The main dangers include fresh competition from newcomers and companies building their own software instead of paying outside vendors.
Most analysts don’t expect software companies to vanish soon. The more immediate worry is slower revenue growth, Jaluria explained. Customers are testing alternatives rather than buying typical upgrades and extras.
Jaluria believes AI could hurt “fat, lazy incumbents” while helping innovative companies that use AI to enhance their offerings.
Questions about AI’s future add to the uncertainty
AI enthusiasm has pushed stocks to records recently. But investors have become pickier about which AI-related companies to back.
Firms are borrowing heavily for AI infrastructure projects. Lenders are proceeding carefully. They’re demanding higher interest payments from big spenders like Meta and Oracle relative to their credit quality.
Investors are asking hard questions, he added. “Are these investments sustainable? Are they going to be profitable? Are there going to be cash flows, or will there not be?”
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