Why software stocks are getting pummelled
economist.com
Why software stocks are getting pummelled
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Re: Why software stocks are getting pummelled
#2Re: Why software stocks are getting pummelled
#3It always amuses me because the people complaining about stocks going down are always the same people who are causing them to go down. Losing money was a choice that those people collectively made. They could have chosen to act differently, in light of the optimistic long-term future.
Re: Why software stocks are getting pummelled
#4QQQ is up 20% over the last year.
GOOG is up 70% over the last year.
"Pummelled" seems extremely sensational...
Re: Why software stocks are getting pummelled
#5Software will be easy to create, which will kill moats and margins on existing products. The game is up for pure saas. Smart money started pricing this in one year ago
Re: Why software stocks are getting pummelled
#6> The fear is that these [AI] tools are allowing companies to create much of the software they need themselves.
AI-generated code still requires software engineers to build, test, debug, deploy, secure, monitor, be on-call, support, handle incidents, and so on. That's very expensive. It is much cheaper to pay a small monthly fee to a SaaS company.
Re: Why software stocks are getting pummelled
#7Software will be easy to create, which will kill moats and margins on existing products. The game is up for pure saas. Smart money started pricing this in one year ago
For a lot of SaaS firms, a big part of their value is the domain knowledge and best practices encoded in the software.
Current AIs often do a bad job of that. Sure, they know a lot of it. But they also get a lot of it wrong, and can’t tell the difference between genuinely good advice, and advice that sounds good but is practically worthless or even harmful.
(Of course I’m biased since I work for a SaaS firm. But I’m talking about them in general, not just my current employer.)
Re: Why software stocks are getting pummelled
#8Software will be easy to create, which will kill moats and margins on existing products. The game is up for pure saas. Smart money started pricing this in one year ago
Was the hard part ever really the software, though? It's the Service part of SaaS that seems to provide the moat. Lock-in, habits, workflows, integrations, and trust. And don't discount the appeal of making some part of your operations "someone else's problem." Could you hire engineers or use an LLM to make your own Google Docs? Probably, yeah, but would that be worth the headache of being responsible for a bespoke internal document system?
Re: Why software stocks are getting pummelled
#9Software will be easy to create, which will kill moats and margins on existing products. The game is up for pure saas. Smart money started pricing this in one year ago
Can't wait for every hospital to create their own patient record system, every accounting office to create their own accounting software, every car service to create their own timebooking solution, etc.
Re: Why software stocks are getting pummelled
#10QQQ is up 20% over the last year. GOOG is up 70% over the last year. "Pummelled" seems extremely sensational...
GOOG is now also an AI company, so not exactly a fair comp as it doesn't fit neatly into the "software" bucket
MSFT is only up 3% over the last year