Software rerating creates selective opportunities
The software sector may have bottomed out after a severe multiple rerating driven by AI disruption fears, leaving high-quality growth and cybersecurity names poised to perform.
The argument
The speakers argued that while the market has aggressively discounted software companies like Adobe over terminal value fears, many names like Palantir and CrowdStrike continue to deliver robust top-line growth. They highlighted cybersecurity as a particularly resilient subsector driving the IGV ETF.
The thesis, stress-tested
✓ What validates it
- ✓Stabilization or expansion of forward P/E multiples for major SaaS players
- ✓Continued double-digit revenue growth in upcoming quarterly earnings reports
▸ Risks discussed
- ▸Some software companies may face genuine terminal value destruction from AI
- ▸Further multiple compression if interest rates remain elevated
Hear it yourself
"And just when you think you found the keys, they changed the locks. I don't know who who said that. Somebody said I didn't make that up. Somebody said that. But if you are in a time of of massive change and massive disruption like we are today, then it's experience can be an enormous disadvantage. Not for everyone and not always, but for the most vocal market pundits, the ones that we've been seeing on the screen for the last fifteen years, the I've seen this movie before type of investors, I found that to be pretty close to a 100% true."
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