John Tinsman
Founder of AOT Invest, Portfolio Manager of AOTG/AOTS ETFs
Software stocks are regaining momentum because the consensus that AI would slow growth and cut earnings was wrong. Palantir accelerated to 92% revenue growth with 325% GAAP EPS growth, and Shopify's revenue growth accelerated to 34%. Strong growth and valuation metrics that keep improving leave little not to like. x.com x.comÂ
Software companies stand out because low marginal cost, alongside high growth, is among the traits most correlated with long-term stock performance. Selling one more copy of software like Microsoft Office costs almost nothing, so growth comes at near-100% margins, unlike Boeing, which must build factories to grow. Fast earnings growth today best predicts future earnings, so the aim is high growth at the most reasonable valuations. feeds.fountain.fmÂ
Shopify is one of the clearest application-software examples of AI materially accelerating growth. Sell-side channel checks point to strong ongoing momentum and AI product attach rates, while Tobi keeps pushing to be first with new products and integrations. The shares are near their pandemic-bubble peak, yet still look discounted to this opportunity; the multiple is lofty, but nowhere near its 2021 level. x.com x.com x.comÂ
Shopify is becoming the infrastructure layer between merchants and AI agents, making AI a source of new demand rather than only a threat. In Q2, AI-driven traffic and orders tripled, and new-buyer orders from AI channels came at nearly twice other channels' rate. Its Catalog gives agents over 1 billion products with 2x higher conversion, and MRR growth reached 19%. A 79x forward P/E premium is justified by accelerating growth, strong retention and improving profitability, if execution holds. … Show more
Shopify faces a lot of risk in the AI revolution, which limits its upside at a $185 billion market cap and its current multiple. It has executed very well, and management may stay ahead so its infrastructure capitalizes on the agentic wave instead of being overrun, but that is not guaranteed. Against other plays and an already heavy software allocation, it is a candidate to offload, possibly after another chance at its all-time high. x.comÂ
Palantir may be undervalued because the market values it as a software company while its opportunity is much bigger. It spans AI deployment, government contracts, enterprise adoption and mission-critical data infrastructure, and expensive stocks can stay expensive when the business keeps expanding. x.comÂ
ServiceNow, Palantir, Microsoft and Zeta are integrating AI and growing fast, so the AI-scare valuation reset is an entry point. Fears that AI will eat SaaS, plus capex questions, compressed valuations, yet ServiceNow's Q1 revenue rose 22% with guidance raised, Microsoft's Azure grew 40%, Zeta's revenue rose 50% with high-30s growth guided, and Palantir guides about 61% growth with US commercial over 115%. AI is a tailwind for platforms that orchestrate it, and they deliver Rule of 40+ at scale. … Show more
Shopify is one of the best businesses around, but its valuation is too difficult to justify owning it. @profpicsou's article asks whether AI will destroy SaaS and whether Shopify, now a near-unavoidable commerce machine with millions of stores and a huge ecosystem, is well placed as plugins connect to ChatGPT, and at what price. Its section on AI and agentic impact is especially worth reading. x.comÂ
Agentic AI commerce could unlock Shopify's next major growth opportunity. Revenue is projected to more than double from $11.6B to $24.2B by 2028, while EPS is expected to rise from $1.48 to $3.32, more than 2.2 times. x.comÂ
Software and consumer discretionary stocks such as Booking, Shopify, Zoom and Amazon are where the AI payoff could show up strongest first. AI chip stocks are just the pickaxes, and their demand exists only because companies expect massive efficiency gains, margin expansion and revenue growth from that compute, gains that have yet to show up in the stocks using it. x.com x.com x.comÂ
Shopify is ripe for agentic AI disruption, which is why the market stays bearish despite cheap-looking multiples and growing revenue. Its main selling point is hundreds of plug-and-play features, yet most stores need only a few, so a bloated platform can be replaced by custom solutions built from a prompt. Logistics can come from firms like ShipMonk and payments from Stripe, and merchants can buy vibe-coded stores cheaply. The shift is moving fast, even if not for everyone today. x.com x.com … Show more
Palantir is becoming the AI operating system for many companies, and its Q2 shows enterprise AI buying at scale. Revenue growth accelerated to 93% from 85%, US commercial grew 149% versus about 134% expected, and FY26 guidance rose to 82% growth from about 71%. US commercial TCV jumped to $2.132B from $1.2B and remaining deal value to $6.238B, pointing to continued acceleration. It has the lowest PEG among peers, and margins should rise as commercial overtakes capped-profit government work. … Show more
