Software stocks such as Adobe sold off on a threat that was never real: the AI labs' internal plans to compete with them were delusional and never a real possibility. x.com 

Software looks like a group that can lead the market higher, with many names from Palantir and ServiceNow to Zeta and MongoDB moving from late Stage 4 or Stage 1 into early Stage 2 uptrends. Sentiment is at an all-time low on fears that AI agents and chatbots will replace SaaS. AI will disrupt some areas, but many software businesses are using it to grow revenue, ship faster and expand operating leverage, and will thrive. The charts will separate survivors from the dead. x.com  x.com 

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 

Software incumbents like monday.com and CrowdStrike should hold their ground because companies will lean on existing software to integrate AI rather than rip it out. Token shortages make AI hardly usable without top-dollar spend, so firms with no business vibe-coding will use software they already pay for, which can scale to get cheaper tokens. No CEO will risk their job, and no CTO will ask the board to scrap a costly software investment. The market won't go much higher without software. x.com  … Show more

Rising yields are winning over the AI benefit for small-company stocks for now. Scott Bessent cited record tax ID applications from small AI companies as evidence that AI enables lean startups, consistent with the earlier catch-up case, but small-company shares have entered a correction under rate pressure. x.com 

Software stocks should keep grinding higher as the market reduces the AI fear factor. Much of the software rally since the April lows was just erasing past losses, and many names remain well below their all-time highs. Since those lows, software has risen almost as much as semiconductors with about 10x less noise. 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

Enterprise software names such as Salesforce, GitLab and Atlassian now trade at roughly replacement cost and should recover about half of what they lost, the usual pattern after a panic. Valuing them on replacement cost rather than profit makes them look different: the bulk of AI value is enterprise-facing, and entrenching systems inside enterprises takes so long that, with people talking about a singularity within two years, no one will have time to build competitors. x.com  x.com 

The software selloff looks overdone, as AI seems to be creating dispersion rather than killing software. All 13 S&P 500 software companies that have reported so far beat EPS estimates, and software stocks are up about 40% from their April lows. x.com 

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.com