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Why software stocks are getting pummelled

economist.com

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Re: Why software stocks are getting pummelled

#51

Post by larodi »

No, they dont distrust AI, they now may start to distrust all the big service providers that are likelty to eventually be eradicated by AI now that everyone can prompt a browser. This perhaps will also finally kill Microsoft Access, which is the closest to AI doing the work instead of you for so long. Then all the do-it-yourself enterprise-grade systems became SAAS, so its right for SalesForce and friends to go fck themselves once in a lifetime for standing in the way of actual software ownership.

I know, you are saying - they will adopt. Perhaps, while also cutting 40% (if not more) personnel during the pivot, and perhaps also by facing more challenges by faster moving competition.

Like, look for a second - why didn't Google create what the perplexity newsfeed is, given they actually like did 10 years ago and then close to nobody was using it. The equilibrium seems super unstable. What happens if a smart kid devices way to compress this information 10x times faster. This immediately means neural chips stall.

This volatility is something, not a joke. The second order effects may be unforseeable in an unparalleled way. Besides, the Luddites organize much better in 2026 given reddit etc.

Re: Why software stocks are getting pummelled

#52

Post by mempko »

This article crystallizes something I witnessed firsthand last week.

Overheard a guy at a restaurant explaining how he builds phone apps with AI and no coding experience. When asked how he verifies the code works, he said he pastes it into a different AI to explain it.

That's the "slopware" problem in action. The code compiles. It might even work. But there's no understanding of what it's actually doing, no ability to debug when it breaks in production, no awareness of the technical cruft accumulating with every prompt. That's a problem for people creating software for others and is a huge opportunity for software developers to take prototypes and build real stuff.

Does anyone remember the RAD days of the 90s?

On the flip side, for people making software to solve THEIR problems, they don't need to make anything production quality. Its for a single user, themselves! Maybe the LLMs are good enough now that people don't need to buy or subscribe to software that solves trivial problems as they can build their own solutions. Maybe the dream of smalltalk, hypercard, and even early web where anyone can use the computer of what it was meant for is finally here?

Re: Why software stocks are getting pummelled

#53

Post by polotics »

eknkc wrote: post #44
iamleppert wrote: post #20

Meanwhile, in the real world, as a software developer who uses every possible AI coding agent I can get my hands on, I still have to watch it like a hawk. The problem is one of trust. There are some things it does well, but its often times impossible to tell when it will make some mistake. So you have to treat every piece of code produced as suspect and with skepticism. If I could have automated my job by now and bee…

Yeah but just look at what happened within the last 2 years. I was not convinced about the AI revolution but I bet in another 2 years, we won't be looking at the output..

Not so sure, there are indiosyncracies now within the various models, I suspect all this is the result of RLHF, and they cause side.effects. I'm not sure that more attention-is-all-you-need is necessarily going to give us another step change, maybe more general intelligence, but not more focus. Possibly also we soon end up with grokked AI's on all side: pushing their agenda whatever you asked... Gemini: "no this won't work with Cloudflare, I created your GCP account, there you go" OpenAI: "I am certain you really wanted me to do all these other tasks and I have done them, you should upgrade your tokens plan" etc (you know how to fill in for DeepSeek and Grok already, right)

Re: Why software stocks are getting pummelled

#55

Post by themafia »

lateforwork wrote: post #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.

> AI-generated code

AI "generated" code requires a large base of training data to draw from. If we all stop writing code then there will no new code written. Just rehashes of stolen ideas. There is no long tail to this industry or ideal.

> That's very expensive.

As long as you convince someone else to pay the bill who cares? The real problem is are you losing your competitive edge? If everyone else can crank out the same stolen crap you can then there is no reason for you to even exist.

Re: Why software stocks are getting pummelled

#56

Post by themafia »

SimianSci wrote: post #50

The Value of software is going down, this much is clear to most people. It will continue to demand proper engineering for its creation and operation. But AI will lead to an increase of unique one-of-a-kind systems created by very small teams. And the world will increasingly rely on these unique systems. SaaS companies need to start reading the writting on the wall, their massive valuations enjoyed when software was h…

> this much is clear to most people.

There are more computers now than there ever have been. More people in more parts of the world have them than ever before. If you have this perspective you may just be locked in a first-world corporate nightmare that has stolen from you all vision and imagination.

Re: Why software stocks are getting pummelled

#58

Post by bryanlarsen »

cedilla wrote: post #49
bryanlarsen wrote: post #32

Earlier quoted context omitted.

The article is about SAP, Salesforce, etc. Making your own Google Docs is stupid unless your company's core business is document management. OTOH Replacing SAP with a bespoke system will make a lot of sense for many companies. SAP is already the worst of both worlds. It'll have been highly customized for your flow so you've got all of the headaches of bespoke software and all of the headaches of SaaS. And unlike Goog…

Companies pay millions and millions to get away from bespoke software, but not simply because of the costs. Companies want to do their core business, they don't want to also be a software enterprise, and assume all the risks that entails. Even if AI makes creating software 10 times less expensive, that doesn't really change.

SAP is bespoke software.

Re: Why software stocks are getting pummelled

#60

Post by kube-system »

rglullis wrote: post #41
lateforwork wrote: post #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.

> AI-generated code still requires software engineers No, they don't. A domain expert armed with an Excel spreadsheet and the ability to write VBA macros will be enough for most business.

I guess that's technically true, because "most businesses" are sole proprietorships without any employees... but they could get by just fine with a checkbook and a note pad.

But the reasons the business software sector grew far beyond Excel of the 1990s is because of the inherent limitations in scaling solutions built by business analysts inside of Excel. There's a vague cutoff somewhere in the middle of the SMB market where software architecture starts to matter and the consequences for fuckup are higher than the cost of paying for professionally made software with, importantly, a vendor on the hook for making sure it doesn't fuck up.

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