|
Feb 18
|
|
—
|
AVOID
|
Mandeep Singh
Senior Analyst, Bloomberg Intelligence
|
"Palantir trading at 80 times sales when ANTHROPIC... [was] at a lower multiples... valuations... were stretched... missing in the software sector right now [is] long term revenue visibility." Public software valuations are disconnected from reality when compared to faster-growing private AI firms. The sector is undergoing a regime shift where traditional metrics (seat growth) are being replaced by "token consumption." Until companies can prove visibility under these new metrics, they remain in a "penalty box." AVOID high-multiple software stocks that have not yet bridged the gap to consumption-based revenue visibility. Market sentiment could ignore fundamentals and continue to bid up high-beta tech names during the bounce. |
Bloomberg Markets
Tech Stocks Bounce Back as AI Concerns Begin ...
|
|
Feb 18
|
|
—
|
SHORT
|
Sophie Huynh
Reporter, The Block
|
BNP Paribas has been Long Hardware / Short Software for over a year. It is unclear which software companies will survive AI disruption (zero terminal value risk for some), whereas hardware/memory demand is certain. The market is not yet pricing in the full "displacement" risk for white-collar software tools. SHORT SOFTWARE SECTOR. AI adoption happens slower than expected, allowing legacy software to adapt. |
Bloomberg Markets
Lagarde Reported to Leave ECB Before Term End...
|
|
Feb 18
|
|
$82.00
$82.00
+0.0%
|
SHORT
|
CNBC
|
The article explicitly states the iShares Expanded Tech-Software Sector ETF has "slumped more than 23%" so far this year due to "fears that AI will render their business models obsolete." This is not an isolated incident but a broad, sector-wide trend driven by a powerful and persistent narrative of AI disruption. The PANW story is just another data point confirming the intense pressure on the entire sector. A medium-term short position on the software sector as a whole, using the ETF as a vehicle. The thesis is that the AI disruption fear is a structural headwind that will continue to weigh on the valuations of traditional software companies. The selloff may be overextended, making the sector ripe for a sharp relief rally. A major positive catalyst from a large-cap software name or a shift in the AI narrative could invalidate the trade. |
Finnhub - PANW
Palo Alto shares sink 7%, CEO defends cyberse...
|
|
Feb 18
|
|
$82.00
$82.00
+0.0%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
Wix, Intuit Expand Partnership To Power Small...
|
|
Feb 18
|
|
—
|
SHORT
|
Adam Vincent
Bloomberg
|
Vincent notes that "Europe's previous weakness is lack of exposure to I.T. is now acting as a strength." He highlights that the FTSE 100 ("The Footsie") and European stocks are near record highs because they offer "cyclical, commodity exposure, [and] a strong financial sector." Conversely, "software stocks coming under pressure continues to be a theme" due to fears over AI displacement and CapEx efficacy. Investors are actively rotating capital. They are fleeing the uncertainty of the "AI Displacement" narrative in the US (specifically software/growth) and seeking safety in the "Old Economy" composition of European and UK indices. The lack of tech in Europe protects these indices from the current tech-centric volatility. LONG European/UK Indices (Cyclicals/Financials) and SHORT/AVOID US Software/Growth Tech to play this rotation. A sudden positive shock in AI productivity data or a reversal in US tech sentiment could unwind this rotation rapidly. |
Bloomberg Markets
AI Displacement to Remain a Headwind for US S...
|
|
Feb 18
|
|
—
|
AVOID
|
Romaine Bostick
Anchor, Bloomberg
|
The ETF tracking software stocks has been "deep in a bear market for weeks." Investors are paralyzed by questions about AI disruption—specifically, which legacy software companies will be displaced by AI agents versus which will adapt. Until winners/losers are clearer, capital is fleeing the broad sector. AVOID. The trend is currently negative with no immediate catalyst for reversal. Oversold bounce; sudden clarity on AI monetization for SaaS companies. |
Bloomberg Markets
Partial Shutdown Drags on Over DHS Funding | ...
|
|
Feb 17
|
|
—
|
AVOID
|
Julie Biel
Portfolio Manager, Kayne Anderson Rudnick
|
Biel argues software businesses that are just "optimizing" or "automating" without proprietary data are "ripe for disruption." Lee (Oaktree) adds that private credit has a "much higher bar" for software, specifically avoiding "coding companies" that can be displaced by AI. The "AI Scare Trade" is real. Companies that previously enjoyed "safe haven" status are now viewed as at-risk of obsolescence. If private credit pulls back lending to these firms, their liquidity and growth stifle. Avoid generic/legacy software stocks. AI adoption might be slower than expected, allowing legacy tech to adapt. |
Bloomberg Markets
Stocks Gain as Tech Holds Up; Bonds Steady | ...
|
|
Feb 17
|
|
$80.96
$82.00
+1.3%
|
AVOID
|
Josh Brown
CEO, Ritholtz Wealth Management
|
"The valuation of the software industry has undergone a sharp correction. PE topped out a year ago at 51 times earnings and now it's 27... The vertical software companies... this is the Pincer move from above [and below]." Software is "Ground Zero" for AI disruption. Vertical SaaS is being squeezed by frontier models (Anthropic/OpenAI) offering capabilities for free, and cheap AI startups undercutting pricing. Despite lower valuations, the obsolescence risk is too high. AVOID Legacy SaaS and Vertical Software stocks lacking proprietary data or "system of record" status. Software stocks could rebound if they successfully integrate AI to reduce costs and boost margins. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
|
|
Feb 17
|
|
$80.96
$82.00
+1.3%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
Micron: DDR5 Prices Surge +400% Since Septemb...
|
|
Feb 17
|
|
—
|
WATCH
|
Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
|
Bosa states, "No more lazy software investing. You got to go with these companies that are thinking about how to integrate these new tools." The broader software sector is in a "sell-off," and the rising tide no longer lifts all boats. Investors must actively filter for companies that integrate AI threats (like Figma) versus legacy SaaS companies that are simply being displaced. WATCH. Do not buy the broad sector index; strictly select companies with clear AI-integration roadmaps. AI disruption accelerates faster than legacy companies can pivot. |
CNBC
Figma announces new partnership with Anthropi...
|
|
Feb 17
|
|
—
|
LONG
|
Dylan Field
CEO, Figma
|
"If you're trying to build software, there will be exponentially more software in the world... It just happens to be going asmtoic now and vertical." The market fear is that AI reduces the number of human developers (selling fewer SaaS seats). The counter-thesis is that AI lowers the cost of creation, leading to an explosion in the *quantity* of software built. This increases the total addressable market for tools that manage, design, and deploy this massive influx of software. Long essential infrastructure software that benefits from *volume* of applications, regardless of whether humans or agents are writing the code. The "Per-Seat" pricing model collapses faster than companies can pivot to "Usage-Based" pricing. |
CNBC
Figma CEO Dylan Field on the software reckoni...
|
|
Feb 17
|
|
—
|
NEUTRAL
|
Dan
Morgan Stanley Analyst
|
The speaker notes, "The market is efficiently and probably rightfully taking a pause on Mag 7... we have alternatives for the first time in a decade." He also acknowledges the "fade software" narrative due to AI disruption fears. While not abandoning "large cap quality adopters," the risk/reward has shifted. The massive spending ramp-up in AI without immediate ROI has created fatigue. Investors are now demanding earnings breadth rather than just AI promises, leading to a consolidation phase for these high-flyers. NEUTRAL / WATCH. The momentum factor has broken; wait for valuation compression or clearer winners in the "AI adopter" vs. "AI disrupted" debate. AI capex yields faster-than-expected revenue, reigniting the rally immediately. |
Bloomberg Markets
Tech Stocks Dip as AI Doubts Linger on Wall S...
|
|
Feb 17
|
|
—
|
LONG
|
Mohamed El-Erian
Chief Economic Adviser at Allianz / Warden Professor
|
"I would certainly be picking up names that were impacted by this theory of the market for lemons... massive opportunity for stock picks... particularly in the AI world and in the world impacted by AI." The recent sell-off in software and AI has been indiscriminate (correlations went to 1), dragging down high-quality companies ("peaches") alongside low-quality ones ("lemons"). This mispricing allows investors to buy companies with strong balance sheets and leadership at depressed valuations. Buy high-quality AI and software stocks that have been oversold. Focus on bottom-up selection (strong balance sheets) rather than buying the whole sector. Continued sector-wide rotation out of tech; failure of specific companies to differentiate themselves from the "lemons." |
CNBC
Expect a lot of volatility as we go forward, ...
|
|
Feb 17
|
|
—
|
AVOID
|
u/Yaashicca
Reddit u/Yaashicca, r/ValueInvesting
|
The potential for AI agents to disrupt the core seat-based SaaS business model warrants avoiding the broader software sector until the impact of this disruption becomes clearer. The Nasdaq is down 5 weeks in a row, software stocks are down 20-50%, and the author highlights the bear case of AI agents disrupting the SaaS pricing model. This isn't just a valuation reset but a potential business model threat, suggesting fundamental risks that outweigh current multiple compression for many companies in the sector. It may be prudent to avoid the entire software sector until there is more clarity on how the AI disruption will play out and which business models will adapt or fail. Missing out on a potential rebound if the AI disruption is overstated, takes longer to materialize, or if certain companies within the sector prove resilient and innovative in adapting to AI. |
Reddit — r/ValueInvesting
The Nasdaq is down 5 weeks in a row. Software...
|
|
Feb 17
|
|
$80.96
$82.00
+1.3%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
What's Going On With Palo Alto Stock On Tuesd...
|
|
Feb 17
|
|
—
|
NEUTRAL
|
Memani
Investment Strategist / CIO
|
"The valuations and the multiples were too high... This is no longer a high multiples sector." The business models aren't broken ("revenue is [not] going to be zero"), but the investment thesis has changed. Investors are no longer willing to pay premium multiples for future growth, leading to a structural de-rating of the sector. NEUTRAL / WATCH. The sector is undergoing a valuation reset; upside is capped until multiples normalize. If growth slows further, multiples could compress even more aggressively. |
Bloomberg Markets
Memani Says the Soft Landing Is Arriving
|
|
Feb 17
|
|
$80.96
$82.00
+1.3%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
Magnificent 7, Bitcoin And Software: Why It's...
|
|
Feb 16
|
|
—
|
WATCH
|
Zach Pandl
Grayscale
|
"The price of Bitcoin... went up with other frontier technology assets and it went down with those types of assets... quantum computing stocks... software companies." The market is currently in a "shoot first" mode regarding AI disruption, selling off all adjacent tech. The opportunity lies in identifying which of these are actually complementary to AI rather than disrupted, but the immediate trend is negative correlation. WATCH for the "Differentiation Trade" to emerge where quality tech separates from disrupted tech. Broad market liquidity crunch could drag all sectors down regardless of fundamentals. |
Unchained (Chopping Block)
Does Bitcoin Win or Lose In The Great AI-Tech...
|
|
Feb 16
|
|
$82.77
$82.00
-0.9%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
6 Sectors Rally While AI Stocks Are 'Skating ...
|
|
Feb 16
|
|
—
|
LONG
|
Chief Investment Strategist
ING Belgium
|
The strategist notes a "disconnect" in the software space where companies "continue to deliver more than what the market expect" regarding earnings, yet "price development... have been decline." He explicitly mentions Google (GOOG) remains "alive and kicking" despite AI fears. The market has irrationally punished software stocks due to AI disruption fears (similar to the Google/ChatGPT scare), ignoring the actual earnings resilience. This valuation gap creates a classic mean-reversion entry point. LONG. "Buy the dip" in software and resilient tech giants. AI disruption actually rendering legacy software obsolete faster than anticipated. |
Bloomberg Markets
Bonds Rise on Rate-Cut Bets; Gold Dips Below ...
|
|
Feb 16
|
|
—
|
AVOID
|
Adam Lynn
Market Strategist / Guest Speaker
|
"We've seen some of these asset management companies, these software companies, which is getting attacked... people are going to park in areas which aren't as exposed." The market is punishing sectors "adjacent" to the crowded AI trade that do not have the same earnings durability. As investors rotate into cyclicals (Europe) or pure hardware (Korea), high-multiple US software and asset managers are becoming sources of funds (sold to buy other assets). AVOID/SHORT due to rotation risk and negative price action ("getting attacked"). A resurgence in US bond yields dropping could reignite a bid for long-duration software assets. |
Bloomberg Markets
US Stocks to Lag European Peers on AI
|
|
Feb 14
|
|
—
|
LONG
|
Michael Chomsky
Founder, OpenClaw Setup Service
|
"It has another thing called a heartbeat where it could be proactive. So every 30 minutes it wakes up and it could do a task... It could check your emails. It could organize them and it can actually give you insights proactively." This functionality marks the transition from "Chatbots" (which wait for user input) to true "Agents" (which act autonomously). This dramatically increases the utility and stickiness of AI software, particularly for integrating with business tools like Stripe, CRMs, and Slack. LONG the AI Agent sector and the underlying models powering them (specifically Claude/Anthropic, implied via "Cla" references). High inference costs and "hallucinations" where the agent performs incorrect actions (e.g., sending the wrong email). |
Thread Guy
The Unexpected Rise of OpenClaw (ft. Michael ...
|
|
Feb 13
|
|
—
|
AVOID
|
Jerry Coghlan
CEO, Pella Capital
|
Coghlan observes a "real dispersion" in credit markets. While the index is fine, there is a "growing tail of companies in software, insurance brokers, asset managers, and media" experiencing significant price declines in their debt. This is the "AI Disruption" trade hitting credit markets. Investors are "re-underwriting cash flows" for the next 20 years, fearing AI will make legacy business models in these sectors obsolete. If bondholders are selling, equity is likely next or already suffering. AVOID debt and equity of legacy firms in these sectors; they are being repriced for existential risk. AI disruption proves slower than anticipated, leading to a relief rally in beaten-down legacy names. |
Bloomberg Markets
US CPI Fuels Fed Wagers, US Inflation Comes I...
|
|
Feb 13
|
|
—
|
SHORT
|
Peter Tchir
Head of Macro Strategy, Academy Securities
|
Tchir notes we are transitioning to a world where AI disrupts companies with high margins that rely on people and intellectual property, rather than physical assets. The "AI Fear Trade" is targeting companies where headcount can be decimated by LLMs. Investors are unwinding leverage in these names, viewing them as the "victims" of the next industrial revolution. SHORT Software and high-margin tech services that lack physical moats. AI productivity gains could eventually boost margins for these companies rather than destroy them. |
Bloomberg Markets
Bloomberg Surveillance 2/13/2026
|
|
Feb 13
|
|
$82.77
$82.00
-0.9%
|
LONG
|
Jonathan Golub
Chief US Equity Strategist, UBS
|
"If you look at the tech basket relative to the rest of the market, it's earnings are on fire... and it's multiples are down 20% versus the rest of the market... there's also a bunch of things in the software space that are dislocated near-term." Tech is historically cheap relative to its own growth metrics. The "dislocation" in software suggests an oversold condition that will revert to the mean as earnings continue to outperform the broader S&P 500. Long Broad Tech and Software. Higher for longer interest rates compressing long-duration asset valuations. |
Bloomberg Markets
The Tech Basket of Stocks Is 'Incredibly Attr...
|
|
Feb 13
|
|
—
|
LONG
|
Ryan Detrick
Chief Market Strategist, Carson Group
|
"Short interest on that [XLK] has absolutely soared over the past month... Software valuations cheapest [they have] been since 2013." High short interest often acts as a contrarian indicator, fueling potential short squeezes when sentiment turns. Combined with historically low valuations in the software sub-sector, the current "fear" provides an attractive entry point for long-term bulls. LONG. Use the current tech pullback to accumulate software names. Continued momentum in the "tech pullback" or higher rates compressing multiples further. |
CNBC
Markets weigh geopolitics, tariffs and tech p...
|
|
Feb 13
|
|
$82.77
$82.00
-0.9%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
Diversify, But Do Not Abandon Tech
|
|
Feb 13
|
|
—
|
SHORT
|
Mark Cranfield
Cross Asset Strategist, Bloomberg
|
"Gradually, we moved into a situation where anything with AI software seemed to be at risk... sticking to the AI hardware makers, the big guys like Taiwan Semiconductor, Samsung." Cranfield notes "Logistics" is the latest sector to sell off due to fears AI will "dismantle some of the workforce." The market is bifurcating the AI theme. It is no longer a rising tide lifting all boats. The trade is now a pair: Long the "Pick and Shovel" hardware providers (TSM, SAMSUNG, AMAT - the latter mentioned in headlines as surging) while Shorting the "Disrupted" sectors where AI replaces labor or reduces pricing power (Logistics like UPS/FDX and generic AI SOFTWARE). LONG Hardware / SHORT Disrupted Sectors (Logistics/Software). A broader tech selloff drags down hardware despite the structural demand; AI disruption fears in logistics prove overblown in the short term. |
Bloomberg Markets
AI Fear Drives Rout & Goldman Lawyer Quits Ov...
|
|
Feb 12
|
|
—
|
SHORT
|
Tim Sandvik
Anchor, Bloomberg
|
C.H. Robinson (CHRW) is down ~14% and the "scare trade continues to make its way through different sectors... software this week, financials... logistic companies apparently are going to lose out to AI." The market is currently pricing in a "terminal value risk" for industries viewed as displaceable by AI agents. Investors are selling first and asking questions later. This momentum suggests continued downside for legacy logistics brokers and "system of record" software companies perceived as vulnerable to AI automation. SHORT (Sentiment/Thematic Rotation). Market realizes the AI displacement threat is overblown/too distant. |
Bloomberg Markets
Software Selloff Deepens on AI Fears | Closin...
|
|
Feb 12
|
|
$80.96
$82.00
+1.3%
|
LONG
|
Richard Saperstein
Founding Principal and CIO of Hightower Treasury Partners
|
When asked about the software sell-off, he says, "Investors should look at IGV... buying that whole IGV." He explicitly advises against buying individual smaller names because it is "dangerous." Software is in the "crosshairs" of AI disruption. While the sector will grow, individual stock picking is risky because some legacy companies will fail. Buying the basket (IGV) captures the sector's recovery and AI adoption without the idiosyncratic risk of a single company being displaced. LONG. Use the ETF to play the software rebound. Broader tech sector correction; high valuations in software relative to rates. |
CNBC
Stock pullback presents opportunities for cli...
|
|
Feb 12
|
|
—
|
AVOID
|
Julian Emanuel
Evercore ISI
|
Emanuel notes that Software, Legal, and Financial professions are viewed as "most likely to be disrupted." Financials are underperforming despite the bull market. The market is pricing in existential risk for business models based on billable hours or code generation. Until these companies prove they can monetize AI rather than be replaced by it, multiples will compress. AVOID sectors in the crosshairs of the "AI Heat Seeking Missile." Oversold conditions could lead to a sharp relief rally if earnings prove resilient. |
Bloomberg Markets
Bloomberg Surveillance 2/12/2026
|
|
Feb 12
|
|
—
|
LONG
|
Unnamed Guest (Market Strategist)
|
"In the U.S., one of the most attractive sectors right now is tech. Software is a big part of the cheapness." The market has indiscriminately sold off software due to "AI disruption" fears. This has pushed valuations to historically attractive levels relative to the broader market. The "sell everything" mentality has created a value entry point for high-quality software names. Long US Software (selectively) on valuation support. Actual AI displacement of legacy SaaS business models (e.g., "Kodak moment"). |
Bloomberg Markets
Nuveen to Buy Schroders in £10B Deal | The Pu...
|
|
Feb 12
|
|
—
|
AVOID
|
Alexandra Semenova
Bloomberg Reporter
|
Despite beating estimates, AppLovin (referred to as "mobile technology marketing firm") and the broader software ETF fell (down 3%). Semenova noted investors are worried about "whether they are strong enough to weather AI disruption." This is a sentiment shift. Good earnings are being sold because the market believes AI agents will render these business models obsolete in the future. The "AI displacement" discount is expanding. AVOID or SHORT on bounces; the market is pricing in existential risk regardless of current cash flow. AI fears prove overblown and these stocks re-rate on strong fundamentals. |
Bloomberg Markets
Trump Tariffs Face House Rebuke | Balance of ...
|
|
Feb 12
|
|
$80.96
$82.00
+1.3%
|
N/A
|
Finnhub News
|
— |
Finnhub - IGV
Intuit Will Likely Survive The SaaS-Pocalypse
|
|
Feb 12
|
|
$80.96
$82.00
+1.3%
|
LONG
|
Tom Lee
Managing Partner and Head of Research, Fundstrat
|
Scott Wapner suggests AI is a "shooting gallery" taking down software stocks. Lee counters: "To me, I think what we're seeing is that there is a payoff coming from AI... It ultimately is productivity." The market consensus is currently fearful that AI will replace traditional software (SaaS) companies, leading to a sell-off. Lee argues the "Second-Order Effect": AI is actually a tool that these companies will integrate to drastically improve their own productivity and product value. The current bearish sentiment on software is a mispricing of this productivity boom. LONG. Buy the software dip caused by AI fears, betting on the productivity realization. If AI adoption slows or if "Hyperscalers" stop spending (as noted by the host), the productivity thesis may be delayed. |
CNBC
Tom Lee: If Gold can rerate higher, then so c...
|
|
Feb 11
|
|
—
|
LONG
|
Dan Suzuki
Investment Strategist, Schroders
|
Suzuki notes a "wholesale selloff" in the software space due to fears that AI will replace legacy SaaS models. The market is "throwing the baby out with the bathwater." Many software companies are partnering with AI firms rather than being displaced. Valuations have compressed significantly compared to the "Mag-7." LONG. This is a contrarian value play within tech. Structural disruption from AI agents could actually render some "seat-based" SaaS models obsolete. |
Bloomberg Markets
Stocks Steady After Strong Jobs Data Dims Rat...
|
|
Feb 11
|
|
—
|
LONG
|
—
|
The speaker notes a "real shakeout" in software last week but regards it as an "opportunity for investors to take exposure." Contrary to fears that AI will disrupt software companies, the speaker argues AI "empowers them" by shortening coding times and enabling workflow efficiencies. Therefore, the dip is a chance to buy premium assets at better prices, specifically targeting cloud infrastructure and cyber defense subsectors. LONG. Continued market perception of AI as a disruptor rather than an enabler; higher valuations compared to the broader IT sector. |
Bloomberg Markets
Software Selloff Is a Chance to Increase Expo...
|
|
Feb 11
|
|
—
|
SHORT
|
Citrini
Substack author, Citrini Research
|
Software companies, particularly Vertical SaaS, digital advertising platforms, and portions of fintech, are experiencing an "AI Disruption Discount." Their high historical valuations (e.g., 30x revenue multiples) are being repriced due to the threat of agentic AI posing existential challenges to their business models, questioning the durability of moats like high switching costs and sticky UX. The market's uncertainty regarding AI's impact on software moats is leading to a sustained re-evaluation and downward pressure on valuations. This repricing is driven by the *threat* of AI, not just its actual impact, suggesting further downside as investors grapple with unknown future competitive landscapes. The software sector, particularly segments vulnerable to AI disruption, faces continued valuation compression and underperformance as capital rotates to more resilient "atoms" plays. Investors should avoid or short companies in these segments lacking clear, AI-proof moats. AI's impact on these sectors proves less disruptive than anticipated, incumbents successfully integrate AI to strengthen their moats, or a broader market rally lifts all boats regardless of fundamental shifts. |
Citrini Research
Atoms vs Bits
|
|
Feb 11
|
|
—
|
AVOID
|
Joe Terranova
Investment Committee Member
|
"What's troubling the market today... is a little bit of a rollover in Crypto... and Software... looks like Software is kind of rolling over a little bit." The immediate post-jobs report reaction is hitting high-duration, high-beta assets hardest. The "momentum" factor is shifting away from these speculative sectors toward quality/value. AVOID. Short-term weakness is visible in these specific momentum pockets. A sudden drop in yields could reignite the bid for high-duration tech and crypto assets. |
CNBC
Here's how to trade around the hot jobs repor...
|
|
Feb 11
|
|
—
|
LONG
|
Bill Ford
Chairman, Ford Motor Company
|
Software valuations have compressed from 10x revenue to 4x revenue. Thoma Bravo notes that portfolio companies with 97% renewal rates are accelerating, not shrinking, despite AI fears. The market is indiscriminately selling software on the fear that AI replaces it. The smart money (PE) sees AI as a feature that enhances "System of Record" incumbents rather than displacing them. LONG. Valuation reset offers a margin of safety for high-retention B2B SaaS. "Thin" wrapper applications actually being displaced by AI agents. |
Bloomberg Markets
Kraft Heinz Pauses Split, Paramount Sweetens ...
|
|
Feb 11
|
|
—
|
SHORT
|
Alexandra Semenova
Bloomberg Reporter
|
Software stocks (IGV) fell ~4% and the "Mag Seven" index dropped 1% following the jobs report. Semenova notes a narrative shift: investors are no longer just worried about AI CapEx spending, but are now pricing in "AI coming for different industries... replacing a lot of the companies' business models." This is the "AI Deflation" thesis. If AI agents replace human workers, "seat-based" SaaS pricing models collapse. Companies that charge per user (System of Record) face existential revenue compression. The sell-off is not broad panic; it is a targeted liquidation of legacy tech/software in favor of other sectors. SHORT. The rotation out of software is structural, driven by the realization that AI is deflationary for software revenues. Oversold bounce if tech earnings show resilience in seat retention. |
Bloomberg Markets
Strong Jobs Report Curbs Fed-Cut Bets | Balan...
|
|
Feb 11
|
|
$83.23
$82.00
-1.5%
|
AVOID
|
Josh Brown
CEO, Ritholtz Wealth Management
|
"We are separating the market into two camps... Information merchants... and legacy platforms... the value of selling information to people is declining at a precipitous rate." For 15 years, the market fetishized "asset-light" software models. AI has flipped this. If AI reduces corporate headcount, the "per-seat" pricing model (SaaS) of companies like Salesforce and Workday collapses because there are fewer humans to sell subscriptions to. Furthermore, AI can replicate "information merchant" value propositions cheaply. Avoid "Vertical Market Software" and companies selling pure IP/Information; they are the "losers" in the AI shift. AI adoption might be slower than expected, or these companies successfully pivot to consumption-based pricing. |
The Compound News
Is It Time to Buy Software Stocks?
|
|
Feb 11
|
|
$83.23
$82.00
-1.5%
|
LONG
|
Bill Ford
Chairman, Ford Motor Company
|
"Ten years ago, software companies were valued at about four times revenue... they went all the way up to 10 to 12 times... they've come back down to where they were about four times revenue." The valuation bubble in SaaS has burst, returning multiples to historical norms. However, the business models remain "durable" and critical. This suggests the downside risk is priced in, while the business quality remains high. Buy the valuation reset in Enterprise Software. AI agents potentially replacing "seat-based" SaaS pricing models. |
Bloomberg Markets
.General Atlantic CEO Ford on Current Investi...
|
|
Feb 11
|
|
—
|
SHORT
|
Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
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"The market is essentially backing this guy up, saying, if AI can do the work, you don't need the software or the people who run it." Salesforce cut 1,000 jobs; Workday cut 2% of its workforce. The "seat-based" SaaS business model is threatened. If AI agents replace human workers, companies need fewer software licenses. The market is pricing in this existential risk to legacy "System of Record" companies. SHORT. These companies are viewed as "victims of AI disruption" and are actively shrinking headcounts while underperforming. AI integration into these platforms could eventually be accretive if they successfully pivot to agent-based pricing. |
CNBC
AI disruption fears rattle stocks
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Feb 11
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LONG
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Binky Chadha
Chief Global Strategist, Deutsche Bank
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Software stocks sold off on AI fears, but fundamentals (earnings) remain strong. The AI disruption threat takes years to play out. The tactical selloff is "way overdone." Shopify (SHOP) mentioned as bouncing back on strong earnings. LONG Software (Tactical bounce). Continued narrative damage regarding AI replacing SaaS seats. |
Bloomberg Markets
Bloomberg Surveillance 02/11/2026
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Feb 11
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WATCH
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Rick Wurster
President & CEO, Charles Schwab
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"Using Wealth.com... they were able to create a two-page visual summary [of a 400-page trust]... AI tools like tax planning... is something that is going to make advisors more effective." Wurster confirms that Schwab is *buying/partnering* with AI solutions (specifically naming Wealth.com) rather than building everything from scratch. This suggests the "AI Winners" in Fintech may not be standalone disruptors, but B2B software providers selling into the massive distribution channels of legacy firms like Schwab. WATCH. Look for public B2B Fintech/AI software companies that serve enterprise wealth managers rather than direct-to-consumer robo-advisors. Incumbents may eventually build these tools in-house, squeezing vendors. |
Bloomberg Markets
AI Will Help Wealth Managers, Not Hurt Them, ...
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Feb 11
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$83.23
$82.00
-1.5%
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LONG
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Michael Batnick
Managing Partner, Ritholtz Wealth Management
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Software stocks have crashed violently (IGV -33%, MSFT -25% wiping out $357B). There was a "panic liquidation" and "puke" in volume on Thursday. While the long-term moat of SaaS is legitimately threatened by AI coding agents (deflationary pressure), the short-term sell-off is an emotional overreaction. When a sector is "held underwater" this long and sellers exhaust, it acts like a buoy and pops back up. Buy the panic for a tactical bounce. The structural bear case (AI replaces SaaS) is true; margins compress permanently. |
The Compound News
What Would You Do With $3 Million? | Animal S...
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Feb 11
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LONG
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Michael Chae
CFO, Blackstone
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Blackstone's CFO notes that trading against the software sector has been "indiscriminate" and "very technical." When an entire sector is sold off without regard for individual company quality ("indiscriminate"), it typically signals a sentiment bottom where prices have detached from fundamentals. Long high-quality software names that were caught in the basket selling. AI disruption is a real, non-zero risk for legacy "system of record" software companies. |
CNBC
How alternative asset managers are easing sof...
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Feb 10
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SHORT
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Deirdre Bosa
Anchor/Reporter, CNBC Tech Check
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"The software sector as a whole is getting decimated because every AI breakthrough here is being seen as a threat." Second-order thinking suggests that if AI can write code or automate enterprise workflows (like the Monday.com example mentioned), the "seat-based" pricing model of SaaS companies is in danger. The market is pricing in terminal value risk for software firms that don't own the underlying model. Momentum Short. The narrative has shifted from "AI benefits Software" to "AI replaces Software." Oversold bounce if earnings show AI is actually increasing seat retention. |
CNBC
U.S. vs. China AI spending gap widens
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Feb 10
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LONG
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Sylvia Jablonski
Chief Investment Officer, Defiance ETFs
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The speaker notes a recent "big pullback" in the AI software story but believes the current economic data supports a recovery. The economy is in a "Goldilocks" zone. Retail sales were cooler than expected but not disastrous ("not so bad that it mandates an emergency"). This allows the Fed to stay on track for two priced-in rate cuts. Lower rates and a stable economy generally favor high-growth tech stocks. December retail sales were flat, but November was strong. Jobs data needs to show stability; further softening in JOLTS or employment numbers could spook the market. |
CNBC
Experts break down the December retail sales ...
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