AWS CEO shrugs off ‘SaaS Apocalypse’ fears as investors worry about ChatGPT era

Artificial Intelligence

• AWS CEO says AI fears for software firms are overblown
• Garman insists SaaS providers can adapt if they keep innovating
• AWS cloud revenue rose 24 percent, beating expectations

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Amazon Web Services chief executive Matt Garman has pushed back against growing investor anxiety that artificial intelligence could slow or even undermine the growth of established software companies, calling much of the concern “overblown”.

Speaking to CNBC on Thursday, Garman said markets may be overreacting to the rapid rise of AI-powered software from companies such as OpenAI and Anthropic, whose models underpin a new wave of applications, including ChatGPT.

Technology stocks have come under heavy pressure in 2026, with investors questioning whether AI could reduce demand for traditional software products. The iShares Expanded Tech-Software Sector ETF is down 24 percent so far this year, putting it on track for its worst annual performance since 2022. Inflation, higher interest rates, and tighter corporate spending have compounded the sell-off.

Some analysts have dubbed the downturn a “SaaS apocalypse”, though many software executives dispute that framing. Databricks CEO Ali Ghodsi said last week the market correction looked like an overreaction, arguing that core business fundamentals remain intact.

Garman struck a similar tone, acknowledging that AI is disruptive but insisting it does not automatically spell trouble for established players. He said AI will change how software is built and consumed, but argued that large SaaS providers and systems-of-record vendors are well positioned to adapt, provided they continue to innovate. Standing still, he warned, would be the real risk.

AWS’s own results offer some support for that view. Amazon said last week that revenue from its cloud infrastructure business rose around 24 percent year-on-year to $35.6 billion in the fourth quarter, beating expectations. Operating margins widened slightly to 35 percent, underlining the division’s profitability even as markets fret about AI-driven disruption.

The cloud unit continues to serve major software customers such as Adobe, Intuit, and Zillow, while also benefiting from demand from AI developers. In November, AWS disclosed a $38 billion spending commitment from OpenAI, reflecting the vast computing needs of large-scale AI models.

Garman said AWS expects overall demand for compute and infrastructure to keep rising, regardless of whether customers build AI systems themselves, buy AI-powered SaaS products, or use a mix of both. “Our customers are going to consume more compute technology and more infrastructure than they ever have,” he said.

However, AI has yet to translate into faster growth for many software companies. ServiceNow, an AWS customer, reported revenue growth of 20.7 percent in the fourth quarter, down from nearly 26 percent two years earlier. Meanwhile, fears about AI-driven efficiency gains are spreading beyond software, with logistics firms warning that automation could reduce headcount needs and pressure incumbents.