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Why software stocks are getting pummelled

economist.com

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Re: Why software stocks are getting pummelled

#11

Post by airstrike »

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.

yes but investors don't know that

or for a more charitable comment, I think the issue people struggle with right now is how much of non-AI software will be replaced by AI-native versions. and it's not even a 1:1 mapping. we may see 5 different small companies replaced by a single AI interface. all TBD, but there's merit to avoiding that risk right now if you can just allocate to NVDA and GOOG instead

Re: Why software stocks are getting pummelled

#13

Post by KellyCriterion »

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.

yes, but this does fit into the head of MBA-bobo-management stylers, who believe ChatGPT will replace everyone :)

Re: Why software stocks are getting pummelled

#14

Post by the_gipsy »

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.

Yes, it's just that some companies will fail to adapt, but there will be new jobs.

Re: Why software stocks are getting pummelled

#15

Post by airstrike »

idle_zealot wrote: post #8
llmslave wrote: post #5

Software 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 i…

the problem is an AI can figure out habits and workflows pretty seamlessly. lock-in is artificial and loses power when it's really easy to make a competing app for large swaths of web apps.

integration is likely the most valuable part of the puzzle, but it's also prone to disruption

I think all that's left are like <50 apps each with their own very bespoke and "power user"-ready interface

Re: Why software stocks are getting pummelled

#16

Post by Supermancho »

Hamuko wrote: post #9
llmslave wrote: post #5

Software 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.

> Can't wait for every hospital to create their own patient record system

Having worked in healthcare, this is the current state (per provider, not physical building).

Re: Why software stocks are getting pummelled

#17

Post by dasil003 »

dheera wrote: post #3

It 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.

No doubt! Collective action is a solved problem! Why do people do things other than the obvious Right Things we can all agree on? Must be some kind of mass psychosis…

Re: Why software stocks are getting pummelled

#18

Post by ncruces »

Hamuko wrote: post #9
llmslave wrote: post #5

Software 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.

We go from left-pad to everything vibe coded. No one vets deps, no one vets vibes. Zero common sense.

Re: Why software stocks are getting pummelled

#19

Post by llmslave »

idle_zealot wrote: post #8
llmslave wrote: post #5

Software 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 i…

yes, if it takes one month to build something that took 9 months previously, it completely changes your go to market strategy

Re: Why software stocks are getting pummelled

#20

Post by iamleppert »

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 been on a beach, I would have done it. Instead of writing code by hand, I now largely converse with LLMs, but I still have to be present and watching them and verifying their outputs.
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