Recent developments in the pricing strategies of AI-powered software products are poised to expand the total addressable market (TAM) for technology products, heralding a potential resurgence in growth for both large and small tech companies.
In late 2023, Battery Ventures observed that the downward trend in revenue growth among software startups had bottomed out, with growth levels showing signs of stabilization in the fourth quarter. Concurrently, Scale Venture Partners projected a revival in momentum for early-stage software companies in 2024 after years of deceleration. These assessments collectively indicated a positive trajectory for the tech sector.
Early indications in 2024 align with these optimistic forecasts, as companies report their Q4 2023 results. Major tech players such as Microsoft, Meta, and Amazon have surpassed revenue and profit expectations, signaling a promising end to 2023.
Looking ahead, there is a compelling rationale to anticipate continued growth momentum in 2024. The market demonstrates a willingness to embrace higher-priced software enhanced with new AI capabilities. This shift not only presents an opportunity for software companies of all sizes to upsell existing customers and attract new accounts but also signifies an expansion of the TAM for software companies.
The broader market landscape suggests that operating within a larger market enables businesses to sustain faster and more prolonged growth. AI technology, therefore, emerges as a catalyst for near-term growth acceleration within the tech industry while simultaneously elevating the growth potential for companies in the long run.
