It appears emerging price points for AI-powered software products will boost the whole addressable market (TAM) for technology products and help reaccelerate growth at tech firms big and small.
In late 2023, Battery Ventures noted that the pullback of revenue growth at software startups had reached its nadir, and growth levels were beginning to stabilize within the fourth quarter. Around the identical time, Scale Enterprise Partners reported that after several years of deceleration, early-stage software firms were expected to renew momentum in 2024. Taken together, it seemed that tech firms were all but out of the woods.
Today, we’re seeing early indications that those optimistic takes were in tune with how 2024 would at the least begin to unfold. Firms are reporting their Q4 2023 results, and Big Tech firms have posted better-than-expected revenue and profit to this point. Microsoft did well, Meta blew the doors off, and Amazon had an excellent quarter as well. We’re still waiting on a number of smaller SaaS firms to report, nevertheless it does appear that 2023 ended on a greater note than earlier within the yr.
There’s good reason to expect more of the identical in 2024. It seems that the market is willing to simply accept that software imbued with latest AI capabilities will cost more. So, yes, software firms of all sizes could have something latest to upsell existing customers and potentially land latest accounts, and it implies that the TAM of software firms is widening.
A business can grow faster for longer in a bigger market than it could possibly in a smaller market. AI is subsequently serving as a near-term growth boost for tech firms while raising the ceiling for the way big they’ll turn into over time.
