TL;DR
Vertical software down 43% YTD while DevTools down 21%, signaling investor skepticism about growth in efficiency-driven markets versus infrastructure expansion.
Key Points
- Vertical software (Veeva, AppFolio, Procore) fell 43% despite structural moats; workflow tools (Monday, Asana) fell 39%
- Fast-growing categories (data infrastructure +22%, security +21%) outperform slow growers by ~20 percentage points YTD
- Atlassian Intelligence reached 5M MAU with 26% cloud revenue growth and 44% RPO growth, validating code management thesis
- Market correlation between forward growth and revenue multiple remains strong at 0.51, suggesting growth expectations drive valuations
Why It Matters
This pricing disparity reveals investor conviction about which software categories benefit from AI adoption versus which face displacement risk. For engineers and infrastructure teams, it signals structural demand tailwinds in data infrastructure and security—areas where AI expansion creates compounding operational complexity rather than efficiency gains that reduce customer spending.
Source: tomtunguz.com