The so-called SaaS-pocalypse has come for all kinds of software companies, as AI upends the "software as a service " industry, or SaaS.Why it matters: There are signs of rising financial stress for software makers, public and private, but as we head into the week, there are some reasons to believe a di-SaaS-ter could be averted.The big picture: Everything is SaaS these days — nearly every piece of software people use, particularly at work, from Slack to Microsoft Word. Companies spend a ton of money for SaaS on a monthly or annual basis.Until very recently, investors in the private markets, like private equity firms, were extremely SaaS positive. The software business offered a safe, recurring stream of revenue. And growth prospects looked good.Then AI entered the chat.Catch up quick: Last week, the stock market appeared to wake up to the notion that AI will change how these companies work, and they didn't like the vibes. Stock prices fell across the sector. Zoom in: But signs of SaaS trouble in the private markets had been building well ahead of that ah-ha moment.An increasing share of loans backing software firms are trading at "distressed" levels, or below 80 cents on the dollar, according to data from PitchBook.By the numbers: $25 billion in software loan volume was marked at distressed levels by the end of January — more than double what it was in December. 30% of all the distressed debt in this loan market is coming from the software sector, which makes up an outsized share of the overall market.Between the lines: These are companies heading toward trouble, says Rachelle Kakouris, director of LCD Research at PitchBook. Think bankruptcies, restructuring, etc. During the pre-inflation days of 2020 and 2021, many of these companies were borrowing money at very low rates. "Now, the halcyon days are behind us," she says.Reality check: There's much talk right now about SaaS disappearing, as companies could soon start writing their own code and software with AI. But companies move slowly, they already trust their SaaS providers, and it would be costly to start over."Replacing a core SaaS platform is effectively open-heart surgery for an enterprise," per a note from PitchBook. More likely, their established providers will incorporate AI into their products."There's a whole bunch of software companies whose stock prices are under a lot of pressure because somehow AI is going to replace them," Nvidia CEO Jensen Huang said last week. "It is the most illogical thing in the world.""Would you use a hammer or invent a new hammer?" Flashback: This definitely isn't the first major disruption to the software business to roil markets and create uncertainty over the sector's future. The advent of the Internet made way for new huge players in software, like Google. Plenty of software companies went under or were absorbed or shrank. Lotus 1-2-3 ring a bell? Probably not if you're under 50 years old.Back in 2007, investor Paul Graham even wrote an obituary for Microsoft.The bottom line: AI is disrupting the investment picture for the software business, but no one truly knows what will happen next.