Key Points:
- Okta CEO Todd McKinnon warns companies must adapt rapidly to AI or risk failure.
- “SaaS-pocalypse” refers to stock pullbacks for software firms due to AI innovations.
- McKinnon stresses human involvement remains vital in AI-driven systems.
- Okta benefits from increased corporate spending on AI agent security.
Okta (OKTA) co-founder and CEO Todd McKinnon delivered a stark warning about the age of artificial intelligence: companies that fail to adapt will likely go out of business. McKinnon believes the pace of change has dramatically increased.
“In a normal time, when technology is maybe moving at a normal pace, you might think every year you want to change 20% of what you’re doing. We’ve really amped that up. You need to change probably 40% or more of what you’re doing,” McKinnon told Yahoo Finance’s Opening Bid. This rapid change applies to processes, market views, and how companies pursue new opportunities.
Tech investors are currently dealing with what some on Wall Street call the “SaaS-pocalypse.” This term describes the significant drop in stock prices for software companies like Salesforce (CRM) and ServiceNow (NOW). This pullback comes from constant innovations by AI model builders such as Anthropic (ANTH.PVT) and OpenAI (OPAI.PVT). Many believe that traditional software companies could become obsolete in less than three years.
Okta’s stock remained steady in premarket trading on Tuesday at $77.05. Several major companies, from Block (XYZ) to Meta (META) to Amazon (AMZN), have announced large layoffs in the past six months, reflecting broader industry shifts.
Despite the rise of AI, McKinnon emphasized that humans still play a crucial role. “The vast majority of agentic systems still have a human in the loop. It’s all about balancing what the agentic systems can do and, more importantly, how the agentic systems can interact with multiple systems,” he explained.
Okta seems to be gaining from increased corporate spending on security for AI agents. The quick development of AI could expose businesses to new cybersecurity threats, making robust security solutions more critical than ever.
The company’s latest earnings report surpassed Wall Street expectations across the board, and its future guidance was also positive. Okta shares are down only 10% year-to-date, which is a much milder decline compared to other software stocks caught in the “SaaS-pocalypse” whirlwind.
Jefferies analyst Joseph Gallo highlighted Okta’s strong position, stating, “We believe Okta has a significant opportunity as it attempts to build out a complete identity platform (AM/IGA/PAM/CIAM). Identity has increased in importance in a WFA/Zero Trust/AI world, and we believe Okta could be among the largest beneficiaries.
