We spend a lot of time thinking about the big waves of technology, the move from mainframe to PC, the networking of those PCs, web 1.0 and web 2.0, SaaS, and now AI.

What is easy to miss is that inside every one of those waves are smaller waves. We call them handoffs, or shakeouts, and they tend to follow a recognizable pattern: new IPOs start appearing, more private companies form, drawdowns get sharper, and the whole market turns more volatile. By the time it settles, the companies sitting on top are rarely the same ones that led going in.

That raises the obvious question of whether software is in one of these handoffs right now.

If you look at quarterly net new ARR, the AI labs are starting to out-add both the hyperscalers and the entire public software universe. When a new set of entrants is putting on more revenue than the incumbents that have defined the category for years, that is usually what the early stage of a handoff looks like.

History suggests the leadership board gets redrawn each time this happens. When software moved from the enterprise era into SaaS, only a handful of the largest names carried over into the next list, and the companies now leading the AI era, OpenAI and Anthropic among them, did not even exist during the last shakeout.

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