The era of severe pressure on software-as-a-service valuations has ended, according to Orlando Bravo, founder and managing partner of private equity firm Thoma Bravo.
Bravo stated that artificial intelligence now provides an "enormous tailwind" for software companies, marking a decisive shift in sentiment toward the sector that has faced headwinds for much of the past year.
The declaration arrives as the software sector closes out May with its strongest monthly performance since 2001.
The rally, driven by a resurgence in investor confidence and strong results from key players like Snowflake and Okta, suggests a broad-based recovery in the space.
Salesforce recently reported better-than-expected quarterly results, though its full-year guidance came in below expectations, highlighting the mixed but generally improving fundamentals across the industry.
Thoma Bravo's stance carries weight as one of the largest buyers of software companies, having accumulated significant positions during the sector's downturn.