Anand
AI Engineer, Thematic Stock & Crypto Trader, Fundamental & Technical Analysis
Security, identity, observability and data governance are the less crowded side of the enterprise AI stack and should benefit as open models make AI cheaper. In multi-model setups, switching models gets easier, but rebuilding years of access controls, audit logs, proprietary data pipelines and internal workflows does not. Hardware remains scarce and critical, but names such as Palo Alto Networks, CrowdStrike, Fortinet, Okta, Datadog, NetApp and Snowflake sit around the model. x.comÂ
Arista Networks, HPE, Dell, NetApp and Palo Alto Networks are the main beneficiaries as companies adopt cheaper AI models on their own data. A reply the author builds on frames the winners as the firms that organize and protect company data. Some of these names may need time after their recent big moves. x.comÂ
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.comÂ
Enterprise demand for sovereign AI favors Palantir's transformation model. In a two-pronged AI economy, businesses can retain their IP and use low-cost open models while frontier labs compete for the last increment of intelligence. x.comÂ
Software companies face a multi-year repricing because AI has removed the scarcity that made software valuable. For 20 years building software required engineers, letting SaaS firms charge monthly fees forever; when anyone can build a working product in a weekend with Claude, software stops being the moat. Atlassian is down 75%, HubSpot 69% and Figma 86%, and layoffs show headcount no longer scales with output. Survivors will be those with distribution, data and trust underneath. x.comÂ
Zeta Global, ServiceNow, Datadog and CrowdStrike look increasingly attractive among software names as AI disrupts applications: businesses with proprietary data that build on AI and deliver intelligence and measurable outcomes could win. Cybersecurity valuations remain a concern. x.comÂ
Fortinet is the best buy in security software on current flows, because frontier AI is increasing security demand rather than replacing it. Companies report that limited releases of models like Anthropic's Mythos have reinforced enterprise demand for security; as stronger models deploy more widely, the attack surface expands and security spending follows. Security software is up 20.9% this year while broader software is down 3.4%, a divergence with further to run as AI deployment accelerates. … Show more
Elastic risks being a jack of all trades and master of none, fighting a multi-front war in search, observability and security in the AI age. AI search competition is ferocious from Pinecone, Weaviate, Atlas Vector, pgvector and Turbopuffer, ClickHouse competes on machine data, and Braintrust leads LLM observability. The bull case is that search is the most AI-relevant primitive and a quarter of Elastic's $100k+ customers run AI use cases, but its AI revenue is indirect, with no hero product. … Show more
AI-using software platforms such as Datadog, Snowflake, JFrog and CrowdStrike are still winning and should never have been caught in the SaaS selloff. The damage has mostly hit legacy application-software names. x.comÂ
SaaS is alive: AI is not replacing entrenched enterprise platforms such as Palantir, Microsoft, ServiceNow, Shopify, Datadog, Salesforce, Snowflake, AppLovin, MongoDB and Zeta. Switching costs and risks are too high, and no credible CTO will swap ServiceNow for a stitched-together AI replacement. Using AI themselves should expand margins by cutting headcount bloat and lifting revenue through AI features. ServiceNow has 600+ customers with ACV over $5M, up 22%, and rose 23% in a week. x.comÂ
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
Datadog was wrongly caught up in the 'AI is killing software' selloff, because it is the tracking and logging tool for AI agents and is moving into security for agentic agents. AI tools in software developers' hands should also drastically speed feature development and releases at software companies. After earnings, $200 is likely a magnet. x.com x.com x.comÂ
