Is there a support anywhere? or is software the canary in the coalmine?
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Will AI diminish the software business? Easy competition? Investors are worried. Are they right?
A point to irrationality (or random walk) could be viewed through the two more volatile names on that list: APP and PLTR.
Applovin is an AI enabled (empowered?) advertising/marketing product maker
Palantir is an AI enabled enterprise data suite which serves AI app capability/service to it’s customers
They have fallen the hardest (YTD or last 5 days, respectively).
When, in business, the managing director decides that “directionally correct” or “good enough” is the finish line, traditional software of all types will be called into question regarding cost, efficiency, flexibility and redundancy.
It will be sooner that marketing, sales and Vision, Mission, Strategy and Tactical progress are AI.
It will be later that FP&A, accounting period end system of record processes will be transitioned from deterministic algorithms to inductive/predictive algorithmic workflows.
It will be sooner that scenario planning, what-if, and forecasting processes are AI.
Some businesses might be impacted more than others. But a name like intuit, how can AI disrupt their business? Not sure.
When market indiscriminately sells, identifying a name that has low or no impact from AI, has a potential for winning trade. Of course it is not easy.
Some of those names valuation are stretched. So if investors take profits because of real or perceived issues is understandable. I am not looking for names with bleeding valuation, but names where the valuation gets attractive and the impact is low…
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I had an ALAB buy order (+3% to the position) sitting at $138, which appeared to be far OTM. It triggered yesterday. Oversold is right.
Congrats, it is already 10% up.
long game. Got lucky on that one… when it’s down another 25% next week, send me a quarter so I can cry in my beer.
Seriously though, a significant amount of froth is off of these names. Earnings season will tell us quite a bit more in a couple weeks.
Unless you’re PLTR which showcased excellent growth, but sold off with the rest of them.
I am looking at some names like $SNOW, $MDB, these data infrastructure names are not going to be disrupted by AI code, at least that’s what I am thinking. 
hahaha, hope I am left with something! Almost all my trades have gone against me recently. I am seriously considering closing all my trading positions, and put some hedge on any strength and sit back.
Separately, I haven’t seen any hedge fund blow up news… that’s when we put a bottom.
I’ll not discuss MDB other than to mention their growth story will be limited to old school data base engineering, assembly and curation unless a developer team is layering AI tools manually into that work flow. The growth story is customer driven, but not catalyst driven. (Atlas)
SNOW continues to build public and private data sets and continues to put AI tools natively into the stack. With a giant ecosystem and many very large corporate users, there are significantly more eyeballs (and effort) to drive opportunity.
The ecosystem of consultants that follow SNOW platforms are doing the selling for SNOW and using native tools that SNOW captures in it’s feature sets.
SNOW is really sold off, also. (40%!)
I don’t think earnings are going to matter, at least in the short term. These have become story stocks, or rather un-story stocks, with everyone running scared that Anthropic is coming for them.
Even the ones that don’t look likely to be disrupted are going to be disrupted for a while as investors reassess.
Earnings were about the past. The un-story is about the future.
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Agreed. See below Adobe’s stock price chart and the revenue and earnings from Morningstar.
The revenue is 2.5x higher than 2018, same for profit, and the share count is down by 16~18%. All the metrics are up, and the stock price is essentially flat since 2018.
This is what I said while the earnings may take time to come down, the multiples could come down in hurry. The market thinks, $ADBE will be disrupted by AI, hence the market is discounting its earnings.
So clearly, earnings today doesn’t matter. What the market thinks about future prospects matter a lot. If you have a variant view then that is your advantage.
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Can we talk about MDB bit more? I thought MDB is a preferred data platform if you are building AI application, whereas SNOW is more of an analytics. Given the expectation that lot of AI application will be build in future, MDB should benefit from AI, right? What would make you walk away from MDB?