How software companies will win big with AI

AI Summary

Author argues AI will make software companies such as Adobe major winners because AI-enabled software can charge far more for large customer productivity gains, and views the SaaS selloff as accumulation.

ADBE — LONG Author claims software companies will run up big because AI will not be free and customers will pay for AI-enabled applications rather than raw AI infrastructure. Using Adobe as the example, he argues embedded AI can halve client labor needs, letting Adobe raise prices and potentially achieve 10x revenue growth from the same customers. He also says the SaaS selloff is meant to let big investors load up. No specific risk or precise catalyst date is stated beyond the coming years.

Thats 10x revenue growth for Adobe. I think Software is going to be the next big cash cow in the coming years.

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Software companies going to run up big time in the coming years.

Everyone carrying on like AI is going to be free in the future 😂

These big tech companies pouring billions into AI, does everyone think they are just doing it for the greater good? Its not going to be free and they are going to charge big money for it.

How is that money going to flow back to them? Through the software that runs it!

Here is an example:

Company wants to use AI to build all their marketing and design for their campaign.

Are they going to Nvidia or Nebius for this? No

They are going to go to a company like Adobe and pay big money for it.

Their spend with Adobe will probably 10x! Why? Here is an example:

Currently company X has 10 employees using Adobe software to get from A to B which takes 1 year.
Each employee costs the company $80,000/yr in wages, so 10 employees costs $800,000.
Company X has 10x Adobe software licences at $1,000/yr each, so $10,000 each year for the 10 employees software.

Lets say Adobe is building AI all across its software (which its doing) so Company X will only need 5 employees to get from A to B in 1 year, therefore only needing $5,000 worth of software licences. Do you think Adobe is going to keep it at the same price when it includes AI which can halve the manpower needed? No

Now lets look at what Company X only needing 5 employees to get from A to B in the future would cost, 5 x $80,000 which is $400,000. 

So company X can save $400,000 per year with Adobes software now due to halving wages needed. Now remember Company X originally only paid $10,000 for the software before.

If they are going to save $400,000 im betting they are going to at least pay $100,000 for that to happen.

Thats 10x revenue growth for Adobe. I think Software is going to be the next big cash cow in the coming years.  I really think the hype up about SAAS going to die off is just to drop the price so the big guys can load up.

Jensen Huang even said a few days ago on AI replacing software that "It is the most illogical thing in the world"

Great to hear everyones thoughts 👍

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