SharespectiveWall street, before your first coffee

Fri 28 Aug 2026 Issue 237

The SaaSpocalypse Refund Plus: America's data centre boom has run into the local council.

Good morning, and welcome to the back half of the week. For months the market has told itself a tidy story about software: AI agents will do what subscriptions used to do, so anyone selling seats by the month is on borrowed time. The trade even got a name — the SaaSpocalypse. Three of those companies reported on Thursday and the story came apart before lunch. Okta rose 28.6%, Salesforce 22.6% and CrowdStrike 20.5%.

Underneath the headline, the day was less cheerful than it looks. The S&P 500 added 0.72%, but technology was the only one of its eleven sectors to finish higher, with healthcare, utilities and staples all copping it as money went the other way. If you owned the average American stock, you had a worse day than the index did.

Market snapshot

US levels are the official 4​pm New York close on Thursday 27 August. The NZX 50 and ASX 200 are Thursday's local closes, and currencies were taken late in Thursday's New York session.

Software spent the year being written off, and one night of results undid most of it

Enterprise software has been the market's designated victim of the AI boom, on the theory that if a machine can do the task, nobody pays for the seat. Thursday tested that with actual numbers and it did not hold up. CrowdStrike reported revenue of US$1.47 billion, up 25% on a year earlier. Okta turned over US$805 million, up 11%. Salesforce beat on revenue and lifted its guidance. Adobe and Autodesk, which reported nothing at all, went along for the ride, up 5.7% and 6.2%.

What the SaaSpocalypse trade actually was. It was a de-rating, not a collapse in business. Investors decided companies charging per user per month would lose customers to AI tools needing fewer users, so they paid less for each dollar of those earnings — the shares fell while the revenue kept growing. That gap is why Thursday was so violent: when a stock is priced for the customers leaving and they stay, the repricing happens at once. Okta and CrowdStrike both credited demand for agentic AI, the same technology the bear case said would eat them.

America's data centre boom has run into the local council, and the power stocks are wearing it

While chips and software had their day, the companies that supply the electricity for all of it went the other way. The problem is not demand — it is that a growing number of American governments have stopped saying yes. Texas Governor Greg Abbott ordered the state's utility commission and grid operator ERCOT on 3 August to audit every data centre in the connection queue — 250 to 300 projects seeking about 200 gigawatts, more than twice the grid's all-time peak. Nothing gets connected while that audit runs. Pennsylvania's governor signed an order this week requiring developers to prove local approval before the state issues environmental permits. Michigan now has 34 local moratoriums and Ohio 35.

Why the grid became the bottleneck. Building a data centre used to be a question of land, capital and chips. It is now mostly a question of the interconnection queue — the waiting list to plug into the grid — and that queue is run by state regulators who answer to residents watching their power bills go up. The AI companies can raise the money and buy the hardware. They cannot vote themselves a substation.

Australian inflation refused to behave, and now the RBA has the problem

The ABS monthly figures landed on Wednesday and were worse than they first looked. Headline inflation rose 1.0% in July from June against forecasts of 0.8%, with petrol up 7.5% after three months of falls. The annual rate did slow, to 3.5% from 3.8%, but only because a big month a year ago dropped out of the calculation, and economists had expected 3.3%. The detail that mattered was the trimmed mean, which strips out the largest moves in both directions: it rose 0.5% in the month, the biggest gain in a year and well above the 0.3% expected. The ASX 200 fell 1.0% on Thursday to 9,038.

How a September hike got back on the table. Australia is now the unusual case of a developed economy where the next move is more likely up than down. Pricing for a hike at the RBA's 28–29 September meeting jumped from 17% before the release to a third or better afterwards, and a first hike by February is treated as close to certain. Deutsche Bank now calls a quarter-point rise in September outright. Westpac disagrees, arguing the labour market and wages are soft enough for the bank to sit still all year.

Newsworthy numbers

Worth a read

Wrapping up

The week ends with the Federal Reserve talking. Chair Kevin Warsh gives his first Jackson Hole keynote at 10​am New York time on Friday — 2​am Saturday in Auckland, midnight in Sydney — three weeks out from the 15–16 September meeting, with markets pricing about a one-in-three chance of a rate rise. The official theme is financial innovation and payments; nobody is tuning in for that.

Broadcom reports on Wednesday 2 September, and the line to watch is custom AI accelerator revenue — the test of whether AI spending is broadening beyond Nvidia. The same day brings the RBNZ's Monetary Policy Statement, with the cash rate at 2.50% and the market split on hold versus hike, while the RBA meets on 28–29 September. The August US payrolls report follows early next month, and after this week's inflation numbers the labour market is the last argument the doves have left.

The kiwi finished Thursday at 1.6810 per US dollar and the Australian dollar at 1.3926, both a touch firmer, with the Aussie at a twelve-week high after the inflation print. The gap between them is doing the work: markets now expect the RBA to raise rates within months, while the RBNZ's next move is a coin toss.

Have a good weekend, and we'll see you tomorrow with Friday's close.