Jefferies’ Brent Thill: The amount of skepticism and negativity around tech is ‘ultra high’
Speakers
Brent Thill
— Analyst, Jefferies
Summary
Brent Thill, Jefferies equity analyst, argues the AI investment cycle is still early and that capex is already paying off through accelerated revenue and improved margins at Google and Microsoft. He says big platforms are the clearest AI beneficiaries, while software is oversold because fears about AI destroying seat-based models are overdone. He also warns AI is beginning to affect hiring and job numbers, especially for new graduates, and notes tech sentiment is extremely negative.
- Brent Thill says AI is still early and remains a major board-level priority.
- Google and Microsoft show accelerated revenue and improved margins from AI capex.
- Big platforms are his preferred tech exposure amid ultra-high skepticism.
- Software names look oversold as AI disruption fears are overexaggerated.
- AI is starting to impact hiring and job market data.
- Tech sentiment is ultra negative, according to Thill.
- Workday layoffs highlight software exposure to employee headcount.
Ideas
Google, Microsoft show AI capex payoff
Google and Microsoft have both accelerated revenue and effectively improved margins, which is proof that the large AI capex investments are already paying off rather than destroying returns.
AI cycle is still very early
AI is still early in its investment cycle. Every major board globally now treats AI as the number one objective, and he thinks this tectonic shift will ultimately be bigger than bitcoin, cloud, or web3, even though he cautions against overhyping it.
Software is oversold on overblown AI fears
Software names have been crushed on fears that AI will reduce headcount and break seat-based software models. He thinks the market is probably overexaggerating what OpenAI and Anthropic will do to them, so the group looks oversold and due for a rebound.
Big platforms are sure AI winners
Amid ultra-high skepticism and negativity on tech, only a few big platforms are viewed as sure AI beneficiaries. Investors want to be involved with these platforms rather than the broader tech complex.
