AI vs. software companies

[Longnose]

Service Now posted strong earnings boosting confidence that AI is not killing Software.

[MungerWunger]

CSU barely pumped. SAD!

 

JK, hoping it goes to $ 1500 per share so I can full port it  

[KPO]

1 hour ago, MungerWunger said:

CSU barely pumped. SAD!

 

JK, hoping it goes to $ 1500 per share so I can full port it  

I bought on Wednesday and it’s already up $175. I wasn’t expecting that and was planning to buy more, but it definitely moved a bit. Fascinating company. I was very late to it, but better late than never! 

[Spekulatius]

Reduced some software exposure here. Y’all know that Claude 4.8 came just out destroying everything in its path.

[MungerWunger]

9 minutes ago, Spekulatius said:

Reduced some software exposure here. Y’all know that Claude 4.8 came just out destroying everything in its path.

Is this the first time where new model release didnt tank software? They're also releasing mythos in the next few weeks and that didn't cause a massive sell off lol

[Spekulatius]

1 minute ago, MungerWunger said:

Is this the first time where new model release didnt tank software? They're also releasing mythos in the next few weeks and that didn't cause a massive sell off lol

I feel like I just run out of a burning house with only my pants on fire.

Anyways, if software sells off again, I am going to increase my exposure again. The whole thing had been a humbling experience to say the least. I do love the volatility however.

 

Bought some ADSK this morning after it inexplicably sold off after earnings this morning but then software caught a bit.

[Cor]

1 hour ago, Spekulatius said:

I feel like I just run out of a burning house with only my pants on fire.

Anyways, if software sells off again, I am going to increase my exposure again. The whole thing had been a humbling experience to say the least. I do love the volatility however.

 

Bought some ADSK this morning after it inexplicably sold off after earnings this morning but then software caught a bit.

They announced a major acquisition to the tune of ~3.5B, largest in their history I believe. The sell off could have been a reaction to that? 

[formthirteen]

4 hours ago, MungerWunger said:

Is this the first time where new model release didnt tank software? They're also releasing mythos in the next few weeks and that didn't cause a massive sell off lol

 

Checks portfolio... My bet is on software going up from here, so I think we agree?!

[thowed]

10 hours ago, Longnose said:

Service Now posted strong earnings boosting confidence that AI is not killing Software.

 

Service Now has become a meme stock - Trump (reportedly?) has been buying, and so... well, y'know.

 

ADSK - yes, believe the acquisition was not good (overpriced?) so poor reflection on management.  Hopefully business continues well anyway - I am an interested party by proxy as an owner of a slug of RWWI.

 

Hoping software has bottomed now (as I have enough!) - Mythos, yadda yadda - well, I'm too old to have a clue (but who does really) and have my own biases - but feel like there have been credible recent arguments that AI will improve software companies, rather than disrupt them, and that there are aspects of the business (human communication & selling, trust etc.) which AI cannot do.

[Cor]

My personal opinion on software vs AI for what little it’s worth is this: AI may help smaller companies build software that matches what the big boys already have and maybe even better by adding novel features more quickly vs having to go through all the red tape at a large company. However, because SaaS customers are often enterprise and not B2C (and this is key), I can’t see a reality where customers stop doing business with say someone like Salesforce to switch to a half priced AI-native alternative (even if you assume that the switch is frictionless). 
 

In enterprise SaaS things can go wrong. When businesses depend on the tools for critical business processes (think ERPs,  inventory management systems, etc) they want to be dealing with a reputable SaaS vendor, not a startup. I am of the opinion that startups cannot support medium/large enterprise customers nearly as well and large companies can. Then come issues of cybersecurity, uptime/reliability…
 

At the end of the day, SaaS is not THAT expensive even at $1M/year for a business worth billions. Even taking that expense down to $100k/year shouldn’t make a material difference to quarterly earnings unless I’m really missing something here? 

 

My assumption here is that most large SaaS companies would have the bulk of their revenue coming from mid-market/enterprise accounts who would not trade cost savings for vendor reputation, supports, security and uptime. If the core base of customers is SMB, I would think differently about the risk to a SaaS company in this new environment. 

[NnnnotSoSmart]

Saaspocalypse? Or just software back to market multiples? Slide below.

 

Starting at 10:52 Gerstner: Most of these software names are trading at a higher multiple than NVDA.

 

NVDA is trading at 13 times earnings for a company that is growing at 70%, for the thing that is the most essential thing to AI. And yet arguably AI challenged software is at twice the multiple.   

 

[Spekulatius]

On 5/29/2026 at 9:48 PM, Cor said:

They announced a major acquisition to the tune of ~3.5B, largest in their history I believe. The sell off could have been a reaction to that? 

Yes, the fit seems quite good, but the valuation of the acquisition not so much. i am not sure its the reason for the decline because Mr Market changed his opinion a couple hours later. 

[Libs]

36:30 mark - Jordi Visser with a clip of an analyst endorsing SAAS.