MNDY monday.com Ltd. : Bullish and Bearish Analyst Opinions

These names are on the SHORT side of Goldman Sachs' "AI Proof" basket. The inference is that these business models (generic SaaS, CRM, language learning) are vulnerable to displacement by AI agents or automated coding/language models. They lack the "physical" or "regulatory" moats of the long basket. SHORT as a hedge against AI disruption eroding seat-based pricing power. AI integration actually boosts their margins rather than replacing them.

"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.

Goldman Sachs compares the current software sell-off to the newspaper industry's 95% decline in the early 2000s. The market is pricing in a future where AI agents replace enterprise software seats (e.g., "Open heart surgery to replace Salesforce"). Even if earnings are good now, the terminal value is being questioned, preventing multiple expansion. AVOID. While bounces will occur (oversold conditions), the narrative damage is severe. Rallies are likely to be sold until these companies prove they are immune to AI displacement. The sell-off may be an overreaction; if these companies successfully integrate AI and prove resilience, they could V-shape recover.

The rise of AI agents is "fuel for the software bears." Monday.com dropped 22% on a disappointing outlook, and Workday's stock has lost nearly half its value over the past year. Historically, companies paid SaaS vendors because building software internally was too hard. Now, AI agents allow non-tech companies (like AT&T or Mercedes) to build their own custom software cheaply and quickly. This shrinks the competitive advantage (moat) of traditional software-as-a-service vendors. Databricks data shows 80% of databases are built by agents; the IGV software ETF is lagging significantly. Traditional vendors may successfully integrate AI to retain value, or the "build vs. buy" trend may revert if internal tools prove difficult to maintain.