The rising threat of generative AI has sent shockwaves through the software-as-a-service sector, triggering sharp declines in stock prices and creating rare opportunities for strategic buyers. Analysts at RBC Capital Markets argue that the current market downturn—driven by fears that AI could disrupt traditional SaaS business models—may soon spark a wave of mergers and acquisitions. Software M&A activity has surged 78% year-to-date, with private-equity deal volume more than doubling as sponsors seek undervalued assets. RBC notes that despite strong financial results, many software companies continue to underperform due to AI-related anxiety. This disconnect, the analysts say, presents a chance for opportunistic buyers to step in. Private equity firms, less pressured by quarterly earnings, are well-positioned to acquire these companies, take them private, reset expectations, and restructure them for an AI-driven future. While regulatory hurdles remain a challenge for large tech firms, financial sponsors have greater flexibility to act. RBC has identified a list of potential M&A targets—companies with solid customer bases, consistent cash flow, and strong fundamentals, but limited AI narratives. These include: Asana, despite its founder-controlled governance, faces growing competition from AI-native tools and could be attractive to buyers looking to consolidate the project management space. Box, with stagnant growth and a deeply discounted valuation, may appeal to private equity seeking to revitalize its cloud content platform. Confluent stands out in the data streaming layer and could be a strategic fit for companies expanding their data infrastructure. Coursera, though facing headwinds in EdTech, has a massive learner base and AI partnerships that make it a compelling target for strategic buyers or a foundation for a PE-led education tech rollup. Dropbox, lacking scale compared to giants like Google and Microsoft, could become a takeover candidate if new product initiatives falter. DocuSign’s pivot to identity access management may not gain traction, making it a potential PE target despite its current valuation. Elastic’s momentum in generative AI and leadership in search technology position it well for strategic consolidation. Five9, with strong CCaaS technology and room for margin improvement, could attract enterprise players like Salesforce or Cisco, or private equity after leadership stabilizes. Fastly’s edge-computing capabilities and reasonable valuation make it a possible target for Google or Cisco. Gen Digital, with stable margins, strong cash flow, and revenue synergies, is a prime candidate for a private equity buyout. GitLab’s growing role in developer security and GenAI tools makes it an appealing strategic acquisition. ZoomInfo’s rich CRM data and integration potential make it a fit for platforms like Salesforce or a PE firm focused on operational efficiency. N-Able, with a presence in the fragmented managed service provider market, offers a consolidation opportunity for private equity. NICE, undervalued and misunderstood by markets, could unlock value through a takeover or breakup of its CCaaS and compliance units. Nutanix, as hybrid cloud adoption increases, may attract major IT vendors looking to expand their SaaS offerings. PagerDuty fits as a logical addition to an integrated IT operations platform. Qualys, with high margins and leadership in vulnerability management, is a top target for consolidation in cloud security. Rapid7, after restructuring and a pivot toward DevSecOps, now has a stronger cash profile that appeals to private equity. Teradata’s progress in cloud analytics makes it a potential acquisition target for large vendors or PE firms. Varonis, focused on data security and governance, is well-positioned for a strategic GenAI-driven acquisition. Zoom, while unlikely to sell soon, remains a valuable asset with a best-in-class video platform that could attract acquirers seeking AI and collaboration synergies. For investors, the AI-driven sell-off in software stocks may ultimately fuel a new era of value-driven consolidation—where the fear of disruption becomes the catalyst for long-term growth.