Amazon Web Services CEO Matt Garman said on CNBC today that the fear that artificial intelligence models will replace major software firms is “overblown.”
“AI is absolutely a disruptive force that’s going to change how software is consumed and how it’s built,” Garman said, according to the report. “And I would argue that the systems of record, as you call them, the SaaS providers and the large players of today have an inside track to winning that business. Now, they have to innovate, just like the rest of the world. They can’t stand still. If they stand still, they’re absolutely going to be disrupted.”
AWS provides cloud services for some of the largest enterprise software companies, such as ServiceNow (NOW), Adobe (ADBE) and Intuit (INTU).
“Our perspective is that our customers are going to consume more compute technology and more infrastructure than they ever have, whether they run it themselves, whether they build it on top of AI, whether they buy it from SaaS vendors, or whether they have some mix of that,” Garman said.
Investors don’t seem to care at the moment. ServiceNow shares have tumbled 32% year-to-date despite posting 20%-plus growth in its latest earnings report. Adobe has plunged 25% over that time frame despite maintaining double-digit growth in its fourth-quarter earnings.
Ray Wang, founder and chairman of Constellation Research, has called this “SaaS apocalypse” totally unwarranted.
“The way they’re being undervalued makes no sense at this moment because I think people are overreacting, saying that software is going to go away with AI, but not all software is going away with AI,” Wang said.