Software's relative strength and sound finances make institutional rotation from semis plausible. It could lead while semis consolidate, despite slow growth at some firms; the market rewards cash flow, healthy balance sheets and manageable debt. Salesforce, ServiceNow, Palantir, Shopify and Workday hold up; SAP's cloud and AI shift, Instacart's massive 10-month base, Veeva's massive five-year base and Atlassian's Stage 2 strength add to the case. Semis may still rally; the view can change. x.com  … Show more

The 'SaaSpocalypse' narrative is wrong because AI makes replacing enterprise software more expensive, not cheaper, leaving beaten-down SaaS stocks at once-in-a-lifetime entry levels. Replicating ServiceNow would take some 40,000 engineers to match 20 years of code, and even AI coding would raise costs, since tokens are not free and model labs lack the capacity to be enterprises' database layer. LLMs are pattern recognizers that can fail catastrophically on new problems. x.com  x.com 

Software is nowhere near a floor because AI has broken the assumption behind the sector's premium: very long-duration, highly recurring revenue. Competition is intensifying, new products such as Anthropic's suite far outperform incumbents like Microsoft Copilot, and AI natives move faster without legacy constraints. Accounting flatters results, with Snowflake's SBC above its CY25 free cash flow. Even at 30x GAAP earnings most names have downside, versus Alphabet at 23x and Nvidia at 14x. x.com  … Show more

Software stocks may benefit from the AI displacement trade's complete reversal through 2026: instead of AI supposedly displacing traditional software companies, software companies could potentially displace the AI trade itself. x.com 

Buying software stocks is the way to position against AI hype, since the AI narrative has devalued them. AI looks massively overhyped and its valuations cannot prove out, but shorting is impractical with volatility premiums this high. Agreeing with @RealZoltanT that SaaS is the best long if you want to be short OpenAI and Anthropic, SaaS is set to rip. x.com  x.com  x.com 

The rally in US software stocks is really long in the tooth, if anyone is still left who believes AI alternatives run by one- or two-person shops can cannibalize a lot of software. x.com 

Money should rotate from software back into semiconductors as software multiples get frothier, a contrarian call against the current narrative that SaaS has an AI tailwind. x.com 

Security software is arguably more of an AI bubble than semiconductors. Firms are bid up to nosebleed multiples on moderate AI-related revenue acceleration while facing medium- to long-term risks from Microsoft, Google and the AI labs and a 10-year Treasury yield above 5%. Their forward P/Es rest on non-GAAP earnings that exclude large stock compensation. A reversal could come from results missing high buy-side bars, security share gains by Microsoft or Google, or AI lab security launches. x.com  … Show more

AI-exposed semiconductors face near-term demand risk as Anthropic's revenue growth slows. Monthly additions fell from $10B to ~$2-3B, though October may improve and one-off headwinds contributed. The AI selloff is not irrational amid rates, debt, politics and supply-chain risks. Despite long-term optimism, a short-term bull case needs an Anthropic IPO or OpenAI fundraise, calmer rates and debt funding, blowout cloud earnings with EPS upgrades, and new applications reviving token monetization. … Show more

Software stocks are becoming the next leadership group, as the functional layer of AI turns hardware investment into real-world outcomes. Software is now leading hyperscalers and crypto, a sign the market is correcting its mispricing of the AI timeline. Those outcomes are still in the first inning, and significant acceleration is expected. x.com