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Why software stocks are getting pummelled

economist.com

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Re: Why software stocks are getting pummelled

#211

Post by rglullis »

lmm wrote: post #193
rglullis wrote: post #189

Earlier quoted context omitted.

What software engineers are being hired to work on: - A facilities management company - A bar/restaurant with a staff of 8 - An Architecture office - A Law Firm with 10 associates - A day care - A car repair shop - A cement factory - A family-owned hotel - A conference/event organizer - A video production crew - A roofing company

Ok, but if your competitors are getting/using software from a supplier who has real software engineers, and using that to operate at a higher level of reliability, then the same argument goes through.

Sorry, but that logic is pure cope.

If you want to go down the value chain, then by definition the less valuable the software is and the easier to be commoditized. The automation is not going to help just the manager-turned-vibecoder, it's also going to help professionals to create FOSS alternatives that can be robust enough.

It's not going to happen overnight, but the trend is there.

Re: Why software stocks are getting pummelled

#212

Post by SunlitCat »

themafia wrote: post #55
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…

That's something i wonder as well. AI needs data to be usable. But what if all the data it gets is just generated by AI?

Re: Why software stocks are getting pummelled

#213

Post by tesch1 »

freejazz wrote: post #95
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 is not copyrightable and therefore cannot be protected through a conventional licensing scheme.

Support for this claim?

Re: Why software stocks are getting pummelled

#214

Post by WarmWash »

robocat wrote: post #196
WarmWash wrote: post #140

Earlier quoted context omitted.

I have a prime example of this were my company was able to save $250/usr/mo for 3 users by having Claude build a custom tool for updating ancient (80's era) proprietary manufacturing files to modern ones. It's not just a converter, it's a gui with the tools needed to facilitate a quick manual conversion. There is only one program that offers this ability, but you need to pay for the entire software suite, and the pro…

Was the custom tool developed by copying how the existing software worked? Copying existing functionality is not always possible, and doesn't capture the real costs.

No, it is incredibly streamlined because it tailored specifically to achieve this modernization.

The paid program can do it because it can accept these files as an input, and then you can use the general toolset to work towards the same goal. But the program is clunky an convoluted as hell.

To give an example, imagine you had tens of thousands of pictures of people posing, and you needed to change everyone's eye color based on the shirt color they were wearing.

You can do this in Photoshop, but it's a tedious process and you don't need all $250/mo of Photoshop to do it.

Instead make a program that auto grabs the shirt color, auto zooms in on the pupils, shows a side window of where the object detection is registering, and tees up the human worker to quickly shade in the pupils.

Dramatically faster, dramatically cheaper, tuned exactly for the specific task you need to do.

Re: Why software stocks are getting pummelled

#215

Post by WarmWash »

mwigdahl wrote: post #161
magicalist wrote: post #149

Earlier quoted context omitted.

> It's not just a converter, it's a gui with the tools needed to facilitate a quick manual conversion. is this like a meta-joke? > I have a prime example of this were my company was able to save $250/usr/mo for 3 users by having Claude build a custom tool for updating ancient (80's era) proprietary manufacturing files to modern ones. The funny thing about examples like this is that they mostly show how dumb and ineff…

It's not just a joke, it's a meta-joke! To address the substance of your comment, it's probably an opportunity cost thing. Programmers on staff were likely engaged in what was at least perceived as higher value work, and replacing the $250/mo subscription didn't clear the bar for cost/benefit. Now with Claude, it's easy to make a quick and dirty tool to do this without derailing other efforts, so it gets done.

We have no programers on staff, we are not a tech company.

I know we are in a bubble here, but AI has definitely made its way out of silicon valley.

Re: Why software stocks are getting pummelled

#216

Post by skydhash »

walkersnice wrote: post #154
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.

> 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? I expect the markets are reflecting that soon there will be more competition. It'll take time, and as LLMs improve, it'll take even less time.

> I expect the markets are reflecting that soon there will be more competition.

> It'll take time, and as LLMs improve, it'll take even less time.

People have written great software in ed(1). We have tools like uxn[0] written on potato computers and billions and years later, we still have to hope for AI output.

[0]: https://100r.co/site/uxn.html

Re: Why software stocks are getting pummelled

#217

Post by themafia »

SunlitCat wrote: post #212
themafia wrote: post #55

Earlier quoted context omitted.

> 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…

That's something i wonder as well. AI needs data to be usable. But what if all the data it gets is just generated by AI?

It has to annotate it too.

We've let models do this before. They devolve into an incomprehensible mess in very short order. Errors multiply. Lossy weight compression on erroneous material makes it all that much more worse.

https://www.youtube.com/watch?v=QEzhxP-pdos

Re: Why software stocks are getting pummelled

#218

Post by tragiclos »

paxys wrote: post #133

Is it AI or just the market realizing that some of these companies were ridiculously overvalued to begin with. Here are the p/e ratios of companies mentioned in the article, after the said "pummeling": * ServiceNow - 70.66 * SAP - 28.70 * Salesforce - 28.15 * Workday - 73.16 * Microsoft - 26.53 So they range from "a bit high" to "still completely bonkers".

Most of those companies make huge margins by suckering large organizations into outrageous contracts. I don't see how AI moves the needle on this one way or the other.

Re: Why software stocks are getting pummelled

#219

Post by heavyset_go »

dehugger wrote: post #97
datsci_est_2015 wrote: post #87

Earlier quoted context omitted.

Our company just went through an ERP transition and AI of all kinds was 0% helpful for the same reason it’s difficult for humans to execute: little to no documentation and data model mismatches.

surprising considering you just listed two primary use cases (exploring codebases/data models + creating documentation)

Please don't feed people LLM generated docs

Re: Why software stocks are getting pummelled

#220

Post by roncesvalles »

yuucc wrote: post #201
roncesvalles wrote: post #195

Earlier quoted context omitted.

Microsoft has consistently proven over the last five years that they have zero ability to execute. It's an astounding failure after failure to do anything right.

All my Microsoft friends constantly berate the state of their hiring pipelines. Sprinkle on a paltry comp and this is hardly surprising.

It was so ridiculously shortsighted of them to decide as a strategy to underpay all their employees compared to the industry standard, especially considering their ambitions are still fairly unbounded (meaning it's not like they said everything we do will be easier than Google or Meta so we don't need to compete for the same pool of talent).

But maybe such a decision was inevitable in their culture. And now it's very difficult to correct.

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