Great discussion so far! I think it makes sense for us to keep threads like this open when there is a changing market dynamic that may impact a lot of stocks on the board. This current inflection point seems to be around agentic AI or automated AI tasks. We will need to determine if our current companies can benefit from agentic AI or if it hurts their business model.
That first wave of AI disruption in 2023 took out some business models which were low hanging fruit for AI or chatbots. One example is ZoomInfo which is a SaaS product to find business contacts. A lot of this functionality could be replicated by a simple query to ChatGPT. Fiverr is another company which saw a huge boom in 2022 but then crashed after the release of ChatGPT. A lot of the tasks that were being contracted on Fiverr could then be done with basic AI.
One general thought I had on this topic is that to be successful in this current market dynamic we are going to need to be willing to adapt to new information effectively. Companies we may have thought of as low growth or commoditized may become high growth like memory makers such as Micron or Sandisk. While some companies that look like high growth innovators will get disrupted from agentic AI. This line of thinking fits in with what Saul said about “this time it is different” for how to think about any current point in time for the market. I’m a big proponent of looking at each individual company as a unique situation which helps keep an open mind.
A good example of how we have had to adapt is from prior beliefs about SaaS. In 2020 it was clear with companies like Zoom that no other business model would be able to scale up as effectively as subscription based software. It was also a common belief that a company producing a physical product is at a disadvantage because this process can only scale up so quickly.
If we end up attached to rigid beliefs about what is better with software vs hardware, we may end up missing some opportunities from our bias. Re-evaluating companies often will be essential with how fast the technological landscape is changing.