PSJ : Bullish and Bearish Analyst Opinions

Richards predicts a 15% default rate in software companies, comparing the sector to Energy in 2016. Kapnick notes that 2021-2022 vintage software deals were priced too high and will struggle. AI is a technological disruption that destroys the "moat" of legacy software companies (pricing power collapses). Private credit lenders leveraged these companies 20x; as growth slows and AI takes over, these companies cannot service debt, leading to a liquidity crunch. SHORT. Avoid the broad software indices, specifically those exposed to mid-cap/legacy SaaS. Fed cuts rates aggressively, bailing out highly leveraged growth companies.