LLMs Are Shredding Vertical SaaS Moats — And Wall Street Knows It

Large language models are systematically destroying the competitive moats that vertical SaaS companies spent years building. That's the thesis from Nicolas Bustamante, and the market carnage backs it up.

Nearly $1 trillion has evaporated from software and services stocks in recent weeks. FactSet alone cratered from a $20 billion peak to under $8 billion. That's not a dip — that's a structural repricing.

The core argument: the domain expertise, workflow lock-in, and data advantages that made vertical SaaS defensible are exactly the things LLMs can now replicate or bypass. Every niche software company that relied on being "hard to replace" just got a lot easier to replace.

The selloff makes structural sense. But Bustamante argues it's happening faster than the actual disruption warrants — temporally exaggerated, even if directionally correct. Markets are pricing in the endgame before the game is over.