The CIO’s priorities are clear. The public markets reveal them.

A cartoon CIO picking AI stack line items and crossing out seat-based SaaS

Two of five public software sectors are up over the last year. The other three are bleeding. The buying pattern is consistent : fund the AI stack, cut everything else.1

DigitalOcean leads the 1Y board at +430%, with Datadog, Palo Alto Networks, & Fortinet each clearing +50%. At the other end, Monday.com, HubSpot, & Atlassian have struggled.

The top 10 and bottom 10 public SaaS companies by 1Y total return

The sector cuts make the dispersion legible.

Infrastructure & Dev Tools (13 names) leads at +68.5% 1Y, 21.4% revenue growth, 10.0x EV/Sales. DigitalOcean, JFrog, Datadog, MongoDB, Cloudflare, Snowflake, & Confluent sit here. The basket combines agent compute, the AI data stack, & developer tooling.

Security (8 names) is the only other positive sector at +17.6% 1Y, with the highest multiple in the sample at 11.6x EV/Sales & the fastest growth at 24.1%. Palo Alto Networks, Fortinet, CrowdStrike, & Okta carry the basket. AI is expanding both the attack surface & the defense surface, & the market is paying up for the line item that holds the perimeter.

AI & Mega-cap Platforms (9 names) is down -5.9% 1Y despite 21.5% growth. Apple, Microsoft, Nvidia, Meta, Oracle, & Palantir sit here. Growth & profitability are not enough.

Communications & Collaboration (9 names) is down -6.6% 1Y on 8.2% growth & a 2.4x multiple. The one exception proves the rule. Twilio is up +62% because AI agents send messages, & every agent needs a phone number. Even inside a losing sector, the AI-adjacent name wins.

Business Applications (48 names) is the carnage at -36.2% 1Y, 12.5% growth, 3.4x EV/Sales. Salesforce, Workday, & ServiceNow anchor the bucket. This is most of public SaaS, & it is the seat-priced layer most exposed to agent substitution.

Growth does not separate the winners from the losers. Infrastructure, Security, & the mega-caps all grow around 21%. What separates them is category. The market pays premium multiples for sectors CIOs believe are necessary during AI, & punishes horizontal application software where AI threatens the seat-based model.

Marc Benioff told the Logan Bartlett Show in September 2025 :

I’ve reduced it from 9,000 heads to about 5,000, because I need less heads.2

Agentforce now handles half of Salesforce’s customer interactions. Every CIO running Service Cloud just heard that on the same podcast.

Same growth, same multiple, opposite returns: Infrastructure and AI Mega-caps sit at nearly identical growth and EV/Sales but the market rewards one and punishes the other

The public market is pricing the same question I asked in So You Want to Sell Inference : is your product a payment processor or a software business? Twilio, DigitalOcean, Cloudflare, & MongoDB sit on the token path because AI agents send messages, run on compute, route through edges, & query data.

  1. The export lacks a true YTD return field, so rankings rely on 1Y, 3M, & 1M returns. A YTD field could shift the order at the margin but not the pattern. ↩︎

  2. Marc Benioff on The Logan Bartlett Show, September 2, 2025. Agentforce handles ~50% of Salesforce’s customer interactions; support costs are down 17%. ↩︎