Sachin Sharma
Investor, 22+ Years in Oil/Gas/Energy, SLB & MBB Background
C3.ai, UiPath, SentinelOne and GitLab may be the ones being disrupted by AI rather than part of the disruption. The AI trade began in Q4 2022, and 3.5 years in, these companies are still telling stories about their pivot with little to show for it, while the strongest companies have surpassed their all-time and 2021 highs by a wide margin. A company with only narrative and no execution is the worst investment, tying up money with high opportunity cost on top of losses. x.com x.comÂ
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.comÂ
SaaS will have its time in the sun again, and now, while it is still hated, is the time to pick favorites and build positions. Bearish sector narratives don't last forever, and the view that all SaaS is being disrupted should ease somewhat this summer, though multiples may not return to prior levels. Some SaaS names have little moat against Anthropic and peers, but many, especially cybersecurity and Palantir, are strengthened by the agentic push. x.com x.com x.comÂ
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.comÂ
Cybersecurity stocks look increasingly bullish on higher timeframes as capital rotates out of AI infrastructure. A new buy signal has appeared on the Startup indicators for the group; the indicators' earlier sell signal caught a roughly 20% drop and their buy signals a roughly 62% rally. The signal can still be invalidated before the weekly close, and the AI trade is not close to over. x.com x.comÂ
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.comÂ
Palantir, Salesforce and Adobe are best avoided amid AI software disruption fears, even as best-of-breed software names. Cult stocks need constant momentum, and once it breaks, valuation, rotation and technical selling hit together, as happened with Tesla. Palantir getting back to $100 was never expected. x.comÂ
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
The S&P 500 is unusually vulnerable for the next several years because it is concentrated in richly valued mega-caps forced into an AI arms race. They are committing about $750B to AI in 2026, roughly all their free cash flow, plus equity raises like Google's $85B and about $224B of bonds this year. Much of that becomes a productivity subsidy for the rest of the economy, so active managers can beat the index with smaller firms that benefit without funding it, from suppliers to AI adopters. x.comÂ
Most money now in SaaS will move into real AI companies such as Tesla and Alphabet, alongside Anthropic and OpenAI, as traditional SaaS is finished. x.comÂ
