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Why software stocks are getting pummelled

economist.com

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Re: Why software stocks are getting pummelled

#121

Post by gwbas1c »

I wonder when a "virtual person" will be able to replace carefully-coded business software?

IE, before software automates a business process, it's typically done by hand, by a real person.

What if someone sells a "virtual person" that's capable of doing the job? What if that "virtual person" is harder to train than a real person, but orders of magnitudes easier than writing custom software or custom business rules?

More importantly: What if the "virtual person" can explain the job they do much better than trying to read source code? That's very useful in ~30ish years when the "virtual person" understands the business process better than the people in the company, and someone is trying to update / streamline processes.

Re: Why software stocks are getting pummelled

#122

Post by TSiege »

flerchin wrote: post #29

Is the pummeling in the room with us right now? YoY looks phenomenal in my portfolio.

I'd look at things beyond the magnificent seven. Economists and traders have noticed that the SP 500 now has a K shape similar to our class wealth distribution. https://fortune.com/2025/11/10/markets-k-shaped-economy-apol...

Re: Why software stocks are getting pummelled

#123

Post by solomatov »

ManuelKiessling wrote: post #113
solomatov wrote: post #106

Earlier quoted context omitted.

>But it does reduced by an order of magnitude the amount of money you need to spend on programming a solution that would work better Could you share any data on this? Are there any case studies you could reference or at least personal experience? One order of magnitude is 10x improvement in cost, right?

I‘m not sure it’s a perfect example, but at least it’s a very realistic example from a company that really doesn’t have time and energy for hype or fluff: We are currently sunsetting our use of Webflow for content management and hosting, and are replacing it with our own solution which Cursor & Claude Opus helped us build in around 10 days: https://dx-tooling.org/sitebuilder/ https://github.com/dx-tooling/sitebuilder…

Thanks for the link.

So, basically you made a replacement for webflow for your use case in 10 days, right?

Re: Why software stocks are getting pummelled

#125

Post by gmueckl »

SimianSci wrote: post #35
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.

"Small Monthly Fee" is a very loaded term here. Im in the negotiations for these platforms, the price that many of these companies command for their products will very often pay the salaries of a whole software department. Add to this the quality of support being the lowest possible option above "nonexistant" and I would say the risk to these SaaS companies is real. The real benefit of these types of SaaS offerings w…

There is one big argument against these "good enough" solutions: commercial business software providers need to put a lot of R&D into finding generalized workflows that apply to as many clients as possible. Effectively, they find and encode current standard practices into their products. This is valuable from a business operations perspective in two ways: it's a good bet that transitioning the customer's operations to match the software is cleaning up internal processes, and it makes onboarding new employees easier because the tools and workflows should be much more familiar right from the start.

Re: Why software stocks are getting pummelled

#126

Post by zdw »

rglullis wrote: post #77
zdw wrote: post #48

Earlier quoted context omitted.

Excel spreadsheets have little to no validation logic that you're actually getting a good result, unless you have a secondary check (most spreadsheets are structured as "single entry" accounting, so lack the checks) A prime example of this was the Reinhart/Rogoff paper advocating austerity that was widely quoted, and then it was discovered that the spreadsheet used had errors that invalidated the conclusions: https:/…

You are taking my comment way too literatlly. The point is not that people will be using specifically Excel, but that most business only pay for software because it is the tool that gives them the most power to automate their processes. They don't need high availablility, they don't need standards compliance, they don't extensive automated tests, they won't need cloud engineeers and SRE... all you need is some tool t…

I don't disagree with anything you say here - using a tool that lacks guardrails is fine for a lot of tasks, but if that's the only tool and used where those guardrails go from "nice to haves" to something more critical is where the problem is.

I've been in ops for a long time and have encountered far too many "our IP addressing plan is just a spreadsheet with manual reconciliation".

I truly wonder if Excel and all it's predecessors and direct clones (Google Sheets, etc.) are holding back industry from making something truly better and more reliable.

Re: Why software stocks are getting pummelled

#127

Post by 9rx »

manmal wrote: post #115
9rx wrote: post #39

Earlier quoted context omitted.

Foundational software requires that, but the foundation is pretty much completely built at this point. The workforce required to keep it running is but a tiny fraction of what was required to build it. The past has shown that innovation in hardware can push for the foundations to be rebuilt, but we've also already got computers basically everywhere now. There may not be some new innovation that requires the foundatio…

Such black and white thinking. Even the little tools fall apart at first sight of an edge case if they are fully vibed. Neither Opus nor codex are good at architecture, and it’s not clear they ever will be.

You still seem to be thinking about code in the traditional sense. A lot of the software I am using now in my non-tech business isn't rooted in code at all. It is simply asking an LLM to carry out a task. Still programming, of course, but not with a traditional programming language. The LLM will produce the excepted results in realtime. The intermediary step of building an executable is totally unnecessary.

In the olden days it would have taken considerable engineering effort to produce a comparable tool. That is no longer the case.

Re: Why software stocks are getting pummelled

#129

Post by gmueckl »

coliveira wrote: post #103
falloutx wrote: post #81

Earlier quoted context omitted.

Everyone says that but I don't see anyone cooking up the next photoshop and selling it at $3/month. Why are we not seeing more options of every tool? Most Saas companies are sales companies at their core rather than software companies. And those sales people are so good that they can sell a todo list for millions.

In the case of Photoshop it is the software itself that is becoming useless. In a few years, using photoshop will be viewed the same as developing physical film, a process from a by-gone era that is still possible, but impractical.

This is an extremely bold claim and I think that it completely overlooks how Photoshop is used by professionals in practice. Professional users want extremely fine grained and precise control over their tools to achieve the specific results that they want. AI "image editing" is incapable of providing anything remotely similar.

Re: Why software stocks are getting pummelled

#130

Post by fragmede »

forgetfreeman wrote: post #82
paulpauper wrote: post #74

Earlier quoted context omitted.

Modern AI probably could’ve done almost all of the work for him. no way. We're not talking a standalone AI created program for a single end-user, but entire integrated e-commerce enterprise system that needs to work at scale and volume. Way harder.

I also have pretty hefty skepticism that AI is going to magically account for the kinds of weird-ass edge cases that one encounters during a large data migration.

It's not that AI is magically going to do it, it's that the human running the migration now has better tools to generate code that does account for those one-off edge cases.
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