AI software selloff creates contrarian opportunities
The guest argued that the market's narrative of AI displacing traditional software companies can create contrarian value opportunities in established software names.
The argument
The guest noted that when software stocks fell sharply due to the 'AI eats software' narrative, it prompted him to look for value in established players, arguing that the market's negative sentiment may have been overdone.
The thesis, stress-tested
✓ What validates it
- ✓Stabilizing or growing enterprise subscription revenues in subsequent quarters
- ✓Successful integration of proprietary AI features that protect market share
▸ Risks discussed
- ▸AI disruption could be more structurally damaging to traditional software than anticipated
- ▸Valuations may remain depressed longer than expected
Hear it yourself
"Because what I had figured out is if you did it all at once, none of them saw that you were applying at all of them. So we literally went from one bank to the other, and she got five of the loans. And then we borrowed another 5 or $10 from her parents, and we were able to buy that building. That's how it started. Again, I think that theme there, that contrarian, no one cared about it. So people look at things today where everything seems like it's in a bubble, sort of. And I always train my brain to think, what are people ignoring? What are people not seeing? So that's where it started."
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