Software companies like Adobe, Intuit, Veeva have been taking A beating over the last 12 to 18 months under the assumption that AI engines like ChatGPT, Claude or llama will make it easy for companies to develop their own software, reducing the need for the products provided by these companies. Software companies like these are trading at a fraction of the PE they used to command in their hay days. Meanwhile, companies like Google, Meta and Microsoft that have been investing heavily in building out data centers are riding the wave of optimism in spite of heavy cash investments. While the industry wisdom continues to toe this line, recent days have seen an uptick in the shares of software providers while the heavy capex investments of Google, Meta and Microsoft have caught everybody’s attention dragging their stocks down.
In this context, Peter. Stansbury has written an excellent article that goes into why he believes that the current wisdom proclaiming demise of software companies like Adobe, Veeva and Intuit, etc., is unlikely to pan out. Meanwhile Ji’s prediction is that companies investing heavily in infrastructure buildout will not recover their investment.
This is a great article and a must read for anybody interested in assessing the potential impact of artificial intelligence investments, and who the winners and losers are likely to be.
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