Enterprise software is resilient despite AI fears
The guest argued that established enterprise software companies are highly defensive and mispriced at 10-12x earnings due to overblown fears of AI disruption.
The argument
He asserted that regulatory, compliance, and SOX requirements make it nearly impossible for enterprises to replace legacy software with probabilistic AI systems. He noted that these businesses continue to grow double digits and maintain pricing power despite user complaints.
The thesis, stress-tested
✓ What validates it
- ✓Enterprise software companies report sustained double-digit revenue growth
- ✓Stable or increasing contract renewal rates in upcoming quarters
▸ Risks discussed
- ▸AI hallucinations are solved faster than expected
- ▸Open-source AI alternatives successfully bypass regulatory hurdles
Hear it yourself
"Kind of basic blocking and tackling stuff. Then building model and recommending stocks. What was your path from there to learning how to invest? I've always been a very active investor personally. I've read enough by that to literally anything and everything on investing I would read, even during college. I knew enough lingo. Now you appreciate you didn't really know much, but you knew the lingo. I was there for a couple of years. Then there was this opportunity. One of my bosses left and went to Montoebel. He said, you wanna come over? Which I thought was interesting in the context of it was much smaller firm."
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