Many posts and podcasts are pointing out that Anthropic and OpenAI are still advertising/hiring administrators for software they are supposed to be replacing, such as CRM. Anecdotal but interesting.
The other thing to keep in mind is that although this technology will prove transformational over time, Anthropic just raised $30b (a record for a unporfitable start up?) and OpenAI is just behind them (in time, not raise size), so they are both in peak marketing of their potential uses phase.
This Livewire article provides a useful if simple framework for evaluating the resilience of SaaS companies in the light of the AI threat.
I like it if only because of confirmation bias - I own several of the companies in this list:
The latest podcast from Intelligent Investor - Stock Take: Sell off as a Service - gives the views of these techno-bears on the SaaSpocalypse.
TLDR:
- Identifying the likely winners and losers is not a game they are willing to play, the future is too uncertain;
- The sell off has brought valuations down from the outlandish to the merely expensive (TNE, XRO, WTC, PME,...)
- SaaS companies are still disliked by these value investors because of their aggressive accounting policies:
- Capitalising of R&D
- Excluding stock based compensation as a real cost to the business
- The only ASX tech stocks they like are ones that aren't SaaS businesses - CAR and REA
The graph below was presented by Ben Clark from TMS and is from GS. I suspect that many of us can feel the pain. This is a relative graph and shows the extent of the damage to capital light, s/w, data, service, platform etc stocks versus the capital heavy, plant and infrastructure style stocks. This is usually low-returning versus high-returning companies, and therefore the LT o/p by the high-returning companies. All the gains reversed, almost 20 years of gains undone in a few months. astonishing. It is a global phenomenon
