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The Saaspocalypse- The Ass And Shoulder Formation…

Wall Street has decided that software is dead, AI is everything, and somehow the companies actually embedding AI into their platforms are the ones worth shooting first and asking questions never. Welcome to the SaaSpocalypse, where logic goes to die and everyone gets paid a management fee for the funeral.

In one breath, the Street insists AI will “disrupt” software, as if models are going to wake up tomorrow and cancel enterprise subscriptions at scale. In the next breath, they refuse to recognize that the very software platforms wiring AI into workflows are posting 20%+ growth, fat margins, and rising contract backlogs.

Take one large, nameless workflow platform that just printed Q4 2025 revenue of about 3.57 billion dollars, up 20.7% year over year. Subscription revenue alone came in at roughly 3.47 billion dollars, also growing 21% year over year. This is not some melting ice cube being disrupted by “AI”; this is an enterprise software machine using AI to sell more software.

The same company’s Q2 2025 revenue was around 3.215 billion dollars, up 22.5% year over year, driven explicitly by AI-powered offerings and an agentic AI platform. Full-year 2024 revenue grew from 8.97 billion dollars to 10.98 billion dollars, about 22.4% growth, while operating income jumped nearly 79% as operating margin expanded into the low double digits. But sure, let’s call that “structurally challenged by AI.”

The Company Wall Street Pretends Can’t Do AI

This anonymous “workflow giant” has an AI suite whose net new annual contract value more than doubled year over year and now sits north of 600 million dollars in ACV. Its AI product is sold via add-on “packs” and consumption-based pricing layered on top of seats, not instead of them. In Q4 2025, it exceeded revenue and EPS estimates and still raised full‑year guidance to the mid‑15 billion dollar range.

Key numbers the sheep are ignoring:

• Q4 2025 total revenue: 3.57 billion dollars, +20.7% year over year.

• Q4 2025 subscription revenue: 3.47 billion dollars, +21% year over year.

• Current remaining performance obligations: about 12.85 billion dollars, +25% year over year.

• FY 2024 revenue: 10.98 billion dollars vs. 8.97 billion in 2023, +22.4%.

• FY 2024 operating income: 1.36 billion dollars, up nearly 79% year over year, with gross margins around 79%.

That’s not “we missed the AI train”; that’s “we turned AI into a bigger invoice and a stickier platform.” Yet the same Street that claims AI is the future treats these numbers like a rounding error, because the narrative of “AI is killing legacy SaaS” photographs better on a sell-side slide deck.

This is classic baby-with-the-bath-water behavior, except Wall Street didn’t just toss the baby; they threw the entire plumbing system out the window and then complained about low water pressure.

AI doesn’t replace enterprise workflow platforms; it supercharges them. This company’s AI tools automate ticket resolution, knowledge retrieval, and employee workflows inside the same system of record their customers have already standardized on. Every incremental AI feature is an excuse to upsell, cross‑sell, and expand seats, which is why subscription revenue is still compounding at 20%+ even as the macro backdrop is supposedly “tighter.”

But instead of reading the financial statements, investors play “AI Hunger Games”:

• If it’s chips, it’s the future.

• If it’s infra, it’s “critical.”

• If it’s application software actually monetizing AI… suddenly it’s “crowded” and “at risk of disruption.”

Translation: We didn’t model this properly, so you must be wrong.

Institutional money loves to cosplay as “smart money,” but the literature calls it what it is: herding. Fund managers systematically mimic each other’s trades because they fear reputational risk more than portfolio risk—better to be wrong in a crowd than right alone.

Academic work on herding shows exactly this:

• Managers herd into and out of assets based on observed aggregate flows, creating correlated trades and “informational cascades.”

• The motive is often reputational: if you underperform while everyone owns the same thing, you can blame “the macro,” but if you stand apart and are early, you get fired.

So you get the classic dark-room routine:
“You go first.”
“No, you go first.”

Nobody wants to be the one buying software when the current fad is “AI infra only” and the Street is busy dunking on anything with the word ‘platform’ in the S‑1. Herding research explicitly notes that fund managers will ignore their own private signals to follow the crowd, especially in extreme market conditions. That’s not capital allocation; that’s career risk management masquerading as “risk control.”

And guess what herding also implies? Being late. By the time these funds pile into the “new AI software leaders,” the charts will already be vertical and the sell‑side will be publishing “initiating with a Buy” notes at the top.

Then you have the hedge funds, who don’t just ride the narrative—they help write it.

Studies of short selling around news show that short sellers extract more profit when they trade on news days, especially on negative headlines, because they are better at processing (and sometimes front‑running) information. Shorting on news days is roughly one and a half times more profitable than on quiet days over a short horizon. That doesn’t happen by accident.

Layer on top the research on public short campaigns: targeted companies introduce fewer new products and see productivity and innovation pulled down after being hammered by sustained negative campaigns. In other words, weaponized news flow doesn’t just move the stock; it can actually damage the underlying business trajectory if management is forced into defense mode rather than building.

Put that into our SaaSpocalypse:

• AI‑heavy infra and chip names get “AI is the future” headlines.

• Application software with real AI adoption and seat growth gets “valuation risk,” “AI commoditization,” and “legacy platform” treatment.

• Short sellers lean into every cautious comment, amplify it across media, and monetize the panic over the next 5–20 trading days.

The talking heads then repeat these narratives until they’re gospel, blissfully unaware that they look like Wall Street’s version of butt cheeks—two halves of the same rear end, unable to distinguish their own talking points from where they’re seated.

Here’s the punchline: once they’re done shooting everything with ‘software’ in the description, they’ll “discover” that the survivors look incredible.

Our nameless workflow platform already shows you the blueprint:

• Deep roots in enterprise: multi‑year contracts, standardized workflows across IT, HR, and customer service.

• Strong AI traction: AI suite ACV more than doubling, consumption‑based add‑ons layered on top of existing subs.

• Revenue compounding above 20%, with operating leverage and high‑70s gross margins.

Companies like that don’t die because someone launched a chatbot. They absorb AI, wire it into every corner of the enterprise, and then raise prices. Seats grow, AI usage grows, and the multiple eventually follows—just usually after the herd has finished panicking and rotated into whatever the next consensus trade is.

Yes, some software names will deservedly get wiped out—zombie SaaS with no moat, no enterprise roots, and no credible AI strategy will be the bodies left in the rubble. But the ones anchored in mission‑critical workflows, with the culture and balance sheet to be nimble AI adopters, are exactly the ones the Street will later pretend it “always liked on weakness.”

When the dust settles, software that partners with AI rather than pretends to compete with it will be the new “AI trade.” The same platforms being accused today of “not doing enough AI”—while literally posting 20%+ growth on AI‑driven workflows and record backlogs—will be rebranded as “core AI operating systems for the enterprise.”

And the herd will show up late, as usual, wondering why the risk‑reward doesn’t look as juicy once the blood has already been cleaned off the street.

Wall Street will again eat its own words; the only open question is whether you want to be one of the sheep waiting to be slaughtered, or the annoying outlier who actually reads the numbers and refuses to confuse narrative with cash flow.

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The Wall Street NVDA Seasonality Hitmen…

Nvidia doesn’t “trade”; Nvidia gets worked like a slot machine whose payout schedule is synced to the earnings calendar and retail’s attention span. The 7.87% face‑ripper is exactly the kind of engineered whiplash you see two to three weeks before a mega‑cap AI earnings print, when Wall Street quietly reloads inventory while selling you a horror story about “AI fatigue” and “volatility risk.”

Step one in the playbook: controlled damage.

• Over the last week NVDA slid from the low 190s toward the low 170s, tagging that 10‑day low cluster around 171 with a clean flush, just as the RSI was getting washed out and social feeds were doing the “is AI over?” routine.

• Miraculously, the “panic” stops right where institutions historically defend the trend: above the 200‑day base in the high 160s and around the neckline you flagged at 175‑180, which just so happens to be the line that would visually “confirm” a head‑and‑shoulders top to every retail technician on the planet.

So the chart politely threatens a textbook breakdown, sentiment sours, and right when the neckline is about to snap, NVDA rips almost 8% in a day, reclaiming the 50‑day moving average near 183 and closing at 185.41 on above‑average volume.

That’s not random; that’s a reset.

You don’t get a five‑day bleed into a prior demand pocket, an RSI reset to neutral, and then a high‑volume reclaim of the 50‑day right as the stock sits roughly flat month‑on‑month into an earnings catalyst by “coincidence.”

Seasonality: Same Movie, Different Quarter

Now layer in the calendar games.

• Earnings are confirmed for February 25, after the close.

• Price into early February is basically orbiting the mid‑180s: January average price ~190, February-to-date ~185, i.e., they walked it down just enough to say “elevated volatility” without actually breaking trend.

• AI capex narratives are still on full blast: NVDA is anchoring hyperscaler spend, data center revenue is up north of 60% year over year, and everyone from sell‑side notes to macro think pieces is still worshipping at the GPU altar.

In other words: fundamentals screaming “secular monster,” tape staged to look “vulnerable.” That is exactly how you farm fresh liquidity.

You terrify the late longs with a seasonal “pre‑earnings shakeout,” you give the bears just enough technical ammo to post scary head‑and‑shoulders screenshots, and then you spike the stock off a moving average like you just discovered value at 185 on a name trading at a 47x forward multiple with 65% revenue growth.

Sure, buddy. Totally organic.

Liquidity Fishing: You Are the Inventory

Look at where the obvious pain lives.

• Buy‑side liquidity: stops under 171–170, conveniently near the 200‑day and that 10‑day low cluster – the exact area the stock almost visited but didn’t crack, leaving shorts and nervous longs both crowded in the same neighborhood.

• Sell‑side liquidity: profit‑taking and breakout orders stacked above the recent local high around 191–194 and into the low‑200s, which line up nicely with the 52‑week high area and the “round-number” psychology zone before and after earnings.

What did we just watch?

• A slam down toward the lower buy‑side pool (171–175), enough to trigger some stops and embolden shorts, but not enough to truly break the 200‑day structure.

• An immediate 7–8% jackknife higher on 1.2–1.3x normal volume, reclaiming the 50‑day and parking the stock back in the no‑man’s‑land mid‑180s, where both bulls and bears can be convinced they’re early rather than wrong.

That is classic “inventory build” behavior. You use the dip to accumulate from forced sellers, you mark it up just enough to prove “dip bought,” and you leave plenty of unfilled sell‑side liquidity above into the event.

Translation: the pros want your shares before guidance, and they want your FOMO after.

Narrative Management: Fear Now, FOMO Later:

The tape is the hardware; the narrative is the software.

At the macro level, nothing in the story has cooled:

• AI infrastructure spend remains a “non‑discretionary” capex line; data center revenue for NVDA has been growing by mid‑60s percent year‑over‑year.

• The company is still the de facto tollbooth for GPU capacity, with a 4.6T+ market cap and a rich but accepted valuation.

Yet the price action in the weeks before earnings is scripted like a horror miniseries:

• Episode 1: “DeepSeek 2.0 will kill GPUs” or “AI multiple compression” – cue a sharp correction, just like the 30–40% air pockets NVDA has seen in prior cycles when sentiment briefly pretended fundamentals didn’t exist.

• Episode 2: “Is the AI trade over?” – social media and financial TV spin a fatigue narrative while the stock drifts lower on rising volume.

• Episode 3: “Wait, maybe this is a buying opportunity” – institutions quietly step in, the stock spikes 3–8% in a day, reclaiming key moving averages, and suddenly every strategist on TV is talking about “AI’s second wave” again.

The fear is not a bug; it is a harvesting mechanism. You don’t get paid big money on Wall Street for letting everyone ride the same trend in peace. You get paid for shaking people out of structurally good stories at structurally stupid prices and then reselling them their own conviction 15–20% higher after the print.

This is why it always feels the same:

• The stock spends a month going nowhere in price while realized volatility is enormous – huge intraday ranges, newsy spikes, and dramatic dips – which is just another way of saying “somebody is rotating size without moving the monthly close much.”

• Earnings date is fixed, expectations are high, and implied volatility gets bid up into the event, making hedging expensive and luring in short-term option punters chasing the next “AI candle of the year.”

• After a scare and a squeeze, the stock ends up right back near its recent average price with a freshly washed‑out holder base—old fish shaken, new fish hooked, and a ready-made supply of emotional liquidity to monetize the second the numbers drop.

If you’re wondering who the product is in this ecosystem, look at who is forced to act:

• The passive funds are locked in.

• The hyperscalers and AI capex budgets are locked in.

• The only flexible variable is retail positioning and short‑term leveraged flow.

You are the “new fish retail liquidity” they need to convert 65% revenue growth and a 47x multiple into year‑end bonus checks.

So yes: the 7.87% rip off the 50‑day, two‑plus weeks before a confirmed earnings date, after a choreographed five‑day bleeding ritual into a textbook neckline, on above‑average volume, with AI capex still structurally on fire, is not some spiritual act of “price discovery.”

It’s just Wall Street running the same farm:

• Scare them out at 171–175.

• Mark it up to 185–195 into earnings.

• Sell the story back to them at the high of the day while they high‑five each other for “buying the dip.”

And the punchline?

The market will call it “healthy consolidation.” You and I will call it what it really is: seasonality (Manipulation) with a body count.

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Kevin Davis Founder of Investment Dojo and Author of The C.R.E.A.M. Report