appears to be emerging The pricing of AI-powered software products will boost the total addressable market (TAM) for technology products and help re-accelerate the growth of technology companies large and small.
Battery Ventures noted that in the second half of 2023, the rebound in revenue growth for software startups reached a nadir, with growth levels beginning to stabilize in the fourth quarter. Around the same time, Scale Venture Partners reported that after several years of slowdown, early-stage software companies are expected to regain momentum in his 2024. All told, tech companies appeared to be mostly out of the woods.
We are now seeing early signs that this optimism is at least in line with how 2024 will begin to unfold. Companies are reporting financial results for the fourth quarter of 2023, and big tech companies have posted better-than-expected sales and profits so far. Microsoft did well, Meta was a huge success, and Amazon had a great quarter. Although we're still waiting to hear from many smaller SaaS companies, it looks like 2023 ended in better shape than it did at the beginning of the year.
There is good reason to expect more of the same in 2024. The market appears to be accepting the higher cost of software that incorporates new AI capabilities. This means software companies of all sizes will have something new to upsell to existing customers and potentially win new accounts. This means that his TAM for software companies is expanding.
Businesses can grow longer and faster in large markets than in small ones. Therefore, AI is helping technology companies grow in the short term while simultaneously raising the ceiling on how companies can grow over time.