[HN Gopher] Why software stocks are getting pummelled
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Why software stocks are getting pummelled
Author : petethomas
Score : 103 points
Date : 2026-02-02 04:50 UTC (18 hours ago)
(HTM) web link (www.economist.com)
(TXT) w3m dump (www.economist.com)
| ciconia wrote:
| https://archive.ph/37Hwn
| dheera wrote:
| It always amuses me because the people complaining about stocks
| going down are always the same people who are causing them to go
| down. Losing money was a choice that those people collectively
| made. They could have chosen to act differently, in light of the
| optimistic long-term future.
| dasil003 wrote:
| No doubt! Collective action is a solved problem! Why do people
| do things other than the obvious Right Things we can all agree
| on? Must be some kind of mass psychosis...
| bnchrch wrote:
| QQQ is up 20% over the last year.
|
| GOOG is up 70% over the last year.
|
| "Pummelled" seems extremely sensational...
| airstrike wrote:
| GOOG is now also an AI company, so not exactly a fair comp as
| it doesn't fit neatly into the "software" bucket
|
| MSFT is only up 3% over the last year
| jen729w wrote:
| You didn't read the article. The first graph plots Workday,
| Salesforce, SAP, and ServiceNow. Google isn't mentioned.
| bnchrch wrote:
| Maybe they shouldve said ERP stocks are getting "pummelled"
| cess11 wrote:
| Some 7-15% down in a trading day is a lot for an established
| corporation. I consider Salesforce dropping 7% without some
| obvious trigger to be at least somewhat newsworthy, and from
| the first sentences in the article I get the impression that
| The Economist is sitting on more examples like that.
|
| A lot of people are tense about the AI venture ouroboros and
| what it might mean for future software, especially people with
| money and little to no experience actually deploying software.
|
| Edit: At the time I saw some memes claiming that roughly 1.5
| trillion dollars in market value had evaporated, which if true
| is not a small sum.
| llmslave wrote:
| Software will be easy to create, which will kill moats and
| margins on existing products. The game is up for pure saas. Smart
| money started pricing this in one year ago
| skissane wrote:
| For a lot of SaaS firms, a big part of their value is the
| domain knowledge and best practices encoded in the software.
|
| Current AIs often do a bad job of that. Sure, they know a lot
| of it. But they also get a lot of it wrong, and can't tell the
| difference between genuinely good advice, and advice that
| sounds good but is practically worthless or even harmful.
|
| (Of course I'm biased since I work for a SaaS firm. But I'm
| talking about them in general, not just my current employer.)
| llmslave wrote:
| ai will know the domain knowledge
| skissane wrote:
| I'm not sure how realistic it is to expect AIs to get
| detailed hands-on domain knowledge. A lot of this stuff
| humans learn by doing and by experience. AI models don't
| learn anything by doing and experience. A model vendor
| can't possibly encode all that experience into their
| training data, and even if they try, the problem is a lot
| of it will be vertical-specific, country/region-specific,
| and it is forever changing. SaaS firms have professional
| services and sales consulting teams who are constantly
| talking to customers about their actual business problems,
| and they feed that accumulated wisdom back to product
| management and data science, who in turn help engineering
| encode it into the product.
|
| From what I've personally seen in SaaS AI agent development
| - if you try to build an AI agent to give customers advice
| in a particular business domain, you need to do a huge
| amount of work validating the answer quality with actual
| domain experts, and adjusting the prompts / RAG documents /
| tool design / etc to make sure it is giving genuinely
| useful advice. It is really easy to build a system which
| generates output which sounds superficially good, but an
| actual domain expert will consider wrong or worthless.
| fragmede wrote:
| not if we don't tell it.
| idle_zealot wrote:
| Was the hard part ever really the software, though? It's the
| Service part of SaaS that seems to provide the moat. Lock-in,
| habits, workflows, integrations, and trust. And don't discount
| the appeal of making some part of your operations "someone
| else's problem." Could you hire engineers or use an LLM to make
| your own Google Docs? Probably, yeah, but would that be worth
| the headache of being responsible for a bespoke internal
| document system?
| airstrike wrote:
| the problem is an AI can figure out habits and workflows
| pretty seamlessly. lock-in is artificial and loses power when
| it's really easy to make a competing app for large swaths of
| web apps.
|
| integration is likely the most valuable part of the puzzle,
| but it's also prone to disruption
|
| I think all that's left are like <50 apps each with their own
| very bespoke and "power user"-ready interface
| llmslave wrote:
| yes, if it takes one month to build something that took 9
| months previously, it completely changes your go to market
| strategy
| senko wrote:
| > Could you hire engineers or use an LLM to make your own
| Google Docs
|
| Or you can just ask your LLM to install
| https://github.com/CollaboraOnline/online
|
| Between open source, LLMs, and SaaS vendors getting greedy
| and privacy invasive, the total pain minimization calc might
| shift for some orgs.
| idle_zealot wrote:
| Even then, I would expect most orgs would want to contract
| out to a company that manages an instance of that open
| source software. That management company could undercut
| bigger players because they don't need as many engineers
| working on features. I don't see where the LLM comes in and
| shifts the calculus here.
| jonathaneunice wrote:
| You might think you can, for a while. Been there, done that.
| But you probably can not do so sustainably in most cases.
| Even if you could, would you really be better off building
| vs. buying? Outsourcing development, operations, and
| maintenance is almost always the better choice, letting you
| focus on the things you do uniquely, differentiably, or
| meaningfully better.
|
| "We have this awesome internal version of Docs that we're
| responsible for fixing, upgrading, and doing support for" is
| not the flex "AI can code anything!" aficionados think it is.
| Especially when you also have similar internal versions of
| Sheets, Jira, Slack, GitHub, Linux, Postgres, and 100 other
| tools.
| bryanlarsen wrote:
| The article is about SAP, Salesforce, etc.
|
| Making your own Google Docs is stupid unless your company's
| core business is document management.
|
| OTOH Replacing SAP with a bespoke system will make a _lot_ of
| sense for many companies.
|
| SAP is already the worst of both worlds. It'll have been
| highly customized for your flow so you've got all of the
| headaches of bespoke software and all of the headaches of
| SaaS. And unlike Google Docs, it'll be highly integral to
| your core business.
| cedilla wrote:
| Companies pay millions and millions to get away from
| bespoke software, but not simply because of the costs.
| Companies want to do their core business, they don't want
| to also be a software enterprise, and assume all the risks
| that entails. Even if AI makes creating software 10 times
| less expensive, that doesn't really change.
| bryanlarsen wrote:
| SAP is bespoke software.
| calvinmorrison wrote:
| what do you mean SAP? like the ERP system?
|
| I would absolutely NEVER steal or rewrite that. So much
| finanical stuff is baked into the business logic that
| impacts finance, regulations, hr, etc.
|
| No do not roll your own ERP core.
|
| Roll everything else
| louiereederson wrote:
| you are aware of the long history of organizations being
| absolutely screwed by bad erp implementations right? nike's
| 2001 issue, the horrific birmingham oracle implementation,
| avon, etc.
| bryanlarsen wrote:
| Those are examples of very good reasons to ditch i2,
| Oracle, SAP, et cetera.
| Hamuko wrote:
| Can't wait for every hospital to create their own patient
| record system, every accounting office to create their own
| accounting software, every car service to create their own
| timebooking solution, etc.
| Supermancho wrote:
| > Can't wait for every hospital to create their own patient
| record system
|
| Having worked in healthcare, this is the current state (per
| provider, not physical building).
| ncruces wrote:
| We go from left-pad to everything vibe coded. No one vets
| deps, no one vets vibes. Zero common sense.
| tjr wrote:
| What would be some examples of some current software products
| for which you expect the game is up?
|
| Are there any software products that you think will survive?
| lateforwork wrote:
| > _The fear is that these [AI] tools are allowing companies to
| create much of the software they need themselves._
|
| AI-generated code still requires software engineers to build,
| test, debug, deploy, secure, monitor, be on-call, support, handle
| incidents, and so on. That's very expensive. It is much cheaper
| to pay a small monthly fee to a SaaS company.
| airstrike wrote:
| yes but investors don't know that
|
| or for a more charitable comment, I think the issue people
| struggle with right now is how much of non-AI software will be
| replaced by AI-native versions. and it's not even a 1:1
| mapping. we may see 5 different small companies replaced by a
| single AI interface. all TBD, but there's merit to avoiding
| that risk right now if you can just allocate to NVDA and GOOG
| instead
| KellyCriterion wrote:
| yes, but this does fit into the head of MBA-bobo-management
| stylers, who believe ChatGPT will replace everyone :)
| the_gipsy wrote:
| Yes, it's just that some companies will fail to adapt, but
| there will be new jobs.
| llmslave wrote:
| cost will go down 70-90%
| kawera wrote:
| SaaS margins too.
| firstplacelast wrote:
| Stock prices are very forward looking, so if half the hype
| being sold about AI is true I would expect most software-
| centric companies to be devalued by wall-street (as the test,
| deploy, support should be automated in the coming
| years...according to the AI CEO's).
|
| However, if I was a wall street analyst and believed the AI
| dreams I would further be concerned that software companies
| aren't taking advantage of the last remnants of value before
| software (and maybe labor) values go to zero.
|
| If you've got a gold mine and have recently built the most
| efficient shovels in the world, why are they not bringing in
| mass amounts of workers to utilize these shovels before all the
| neighboring mines. Once all that gold is on the market, the
| price crashes so it's better to be one of the first mines to
| get in and dig out all possible value first.
|
| I think you either don't believe in the AI hype, which means a
| lot of silicon valley companies are tremendously overvalued. Or
| you do, in which case another huge part of silicon valley is
| overvalued especially when they are not looking to out-innovate
| their peers (as evidenced by downsizing), but just riding the
| wave of AI until what they are selling has no marginal value
| over some guy coding alone in his bedroom. SV is putting itself
| into a weird position, but still has some time for financial
| buffoonery before the party stops.
| falloutx wrote:
| >If you've got a gold mine and have recently built the most
| efficient shovels in the world, why are they not bringing in
| mass amounts of workers to utilize these shovels before all
| the neighboring mines
|
| Because they are completely consumed by the need to increase
| margins, which they think they will be able to do it with AI
| by laying off a lot of people. But Saas economy is connected
| and based on per user pricing, so as layoffs continue, Saas
| economy is showing its biggest weakness. All of Saas
| companies also seem to embrace AI so much that they would
| rather add another summarise button rather than actually
| making something which cant be copied easily by competitors.
| SimianSci wrote:
| "Small Monthly Fee" is a very loaded term here. Im in the
| negotiations for these platforms, the price that many of these
| companies command for their products will very often pay the
| salaries of a whole software department. Add to this the
| quality of support being the lowest possible option above
| "nonexistant" and I would say the risk to these SaaS companies
| is real.
|
| The real benefit of these types of SaaS offerings was their
| ubiquity across multiple industries and verticals. If a company
| bought Salesforce, they could very readily find employees that
| would be able to quickly onboard since they would likley have
| used it at previous companies. AI software generation is
| changing this as more and more software being created is
| bespoke and increasingly one-of-a-kind with these tools
| allowing companies to create software that fits their unique
| and specific needs.
|
| My hot take here is that the moats previously enjoyed by SaaS
| companies will increasingly vanish as smaller and smaller teams
| can assemble "good enough" solutions that companies will adopt
| instead of paying giant chunks of their budget on pre-built
| SaaS tools that will increasingly demand more training to
| Onboard.
| falloutx wrote:
| Saas was always fueled by B2B buying through same investor
| circle. sequoia companies buying from other sequoia
| companies, softbank companies buying from other software
| companies. Without this circular buying and selling of the
| software, the whole B2B software market crashes.
| louiereederson wrote:
| >My hot take here is that the moats previously enjoyed by
| SaaS companies will increasingly vanish as smaller and
| smaller teams can assemble "good enough" solutions that
| companies will adopt instead of paying giant chunks of their
| budget on pre-built SaaS tools that will increasingly demand
| more training to Onboard.
|
| why do people pay red hat/ibm for rhel? they earn pretty good
| margins too. to parent's point on software/=code
| gmueckl wrote:
| There is one big argument against these "good enough"
| solutions: commercial business software providers need to put
| a lot of R&D into finding generalized workflows that apply to
| as many clients as possible. Effectively, they find and
| encode current standard practices into their products. This
| is valuable from a business operations perspective in two
| ways: it's a good bet that transitioning the customer's
| operations to match the software is cleaning up internal
| processes, and it makes onboarding new employees easier
| because the tools and workflows should be much more familiar
| right from the start.
| mattmaroon wrote:
| A lot of these companies are not small monthly fees. And if
| you've ever worked with them, you'll know that many of the
| tools they sell are an exact match for almost nobody's needs.
|
| So what happens is a corporation ends up spending a lot of
| money for a square tool that they have to hammer into a circle
| hole. They do it because the alternative is worse.
|
| AI coding does not allow you to build anything even mildly
| complex with no programmers yet. But it does reduced by an
| order of magnitude the amount of money you need to spend on
| programming a solution that would work better.
|
| Another thing AI enables is significantly lower switching
| costs. A friend of mine owned an in person and online retailer
| that was early to the game, having come online in the late 90s.
| I remember asking him, sometime around 2010, when his Store had
| become very difficult to use, why he didn't switch to a more
| modern selling platform, and the answer was that it would have
| taken him years to get his inventory moved from one system to
| another. Modern AI probably could've done almost all of the
| work for him.
|
| I can't even imagine what would happen if somebody like Ford
| wanted to get off of their SAP or Oracle solution. A lot of
| these products don't withhold access to your data but they also
| won't provide it to you in any format that could be used
| without a ton of work that until recently would've required a
| large number of man hours
| wtp1saac wrote:
| If it is not a small fee, I do wonder - is there still
| advantage to having a provider which one may take out a
| lawsuit against if something goes wrong? To what extent might
| liability and security vetting by scaled usage still hedge
| against AI, in your view?
| paulpauper wrote:
| _Modern AI probably could've done almost all of the work for
| him._
|
| no way. We're not talking a standalone AI created program for
| a single end-user, but entire integrated e-commerce
| enterprise system that needs to work at scale and volume. Way
| harder.
| forgetfreeman wrote:
| I also have pretty hefty skepticism that AI is going to
| magically account for the kinds of weird-ass edge cases
| that one encounters during a large data migration.
| FireBeyond wrote:
| I was interviewing with a company that has done ETL
| migration, interop and management tools for the
| healthcare space, and is just dipping their toes in the
| "Could AI do this for us or help us?"
|
| Their initial answer/efforts seem to be a qualified but
| very qualified "Possibly" (hah).
|
| They talked of pattern matching and recognition being a
| very strong point, but yeah, the edge cases tripping
| things up, whether corrupt data or something very
| obscure.
|
| Somewhat like the study of MRIs and CTs of people who had
| no cancer diagnosis but would later go on to develop
| cancer (i.e. they were sick enough that imaging and
| testing was being ordered but there were no/insufficient
| markers for a radiologist/oncologist to make the
| diagnosis, but in short order they did develop those
| markers). AI was very good at analyzing the data set and
| with high accuracy saying "this person likely went on to
| have cancer", but couldn't tell you why or what it found.
| fragmede wrote:
| It's not that AI is magically going to do it, it's that
| the human running the migration now has better tools to
| generate code that does account for those one-off edge
| cases.
| datsci_est_2015 wrote:
| Our company just went through an ERP transition and AI of all
| kinds was 0% helpful for the same reason it's difficult for
| humans to execute: little to no documentation and data model
| mismatches.
| dehugger wrote:
| surprising considering you just listed two primary use
| cases (exploring codebases/data models + creating
| documentation)
| gmueckl wrote:
| I don't find this surprising. Code and data models encode
| the results of accumulated business decisions, but
| nothing about the decision making process or rationale.
| Most of the time, this information is stored only in
| people's heads, so any automated tool is necessary blind.
| phatfish wrote:
| This captures succinctly the one of the key issues with
| (current) AI actually solving real problems outside of
| small "sandboxes" where it has all the information.
|
| When an AI can email/message all the key people that have
| the institutional knowledge, ask them the right discovery
| questions (probably in a few rounds and working out which
| bits are human "hallucinations" that don't make sense).
| Collect that information and use it to create a solution.
| Then human jobs are in real trouble.
|
| Until that AI is just a productivity boost for us.
| s5fs wrote:
| Exploring a codebase tells you WHAT it's doing, but not
| WHY. In older codebases you'll often find weird sections
| of code that solved a problem that may or may not still
| exist. Like maybe there was an import process that always
| left three carriage returns at the end of each record, so
| now you got some funky "lets remove up to three carriage
| returns" function that probably isn't needed. But are you
| 100% sure it's not needed?
|
| Same story with data models, let's say you have the same
| data (customer contact details) in slightly different
| formats in 5 different data models. Which one is correct?
| Why are the others different?
|
| Ultimately someone has to solve this mystery and that
| often means pulling people together from different parts
| of the business, so they can eventually reach consensus
| on how to move forward.
| solomatov wrote:
| >But it does reduced by an order of magnitude the amount of
| money you need to spend on programming a solution that would
| work better
|
| Could you share any data on this? Are there any case studies
| you could reference or at least personal experience? One
| order of magnitude is 10x improvement in cost, right?
| ManuelKiessling wrote:
| I'm not sure it's a perfect example, but at least it's a
| very realistic example from a company that really doesn't
| have time and energy for hype or fluff:
|
| We are currently sunsetting our use of Webflow for content
| management and hosting, and are replacing it with our own
| solution which Cursor & Claude Opus helped us build in
| around 10 days:
|
| https://dx-tooling.org/sitebuilder/
|
| https://github.com/dx-tooling/sitebuilder-webapp
| solomatov wrote:
| Thanks for the link.
|
| So, basically you made a replacement for webflow for your
| use case in 10 days, right?
| stefan_ wrote:
| Oh, but that doesn't matter. SaaS tools aren't bought by the
| people that have to use them. Entire groups in big companies
| (HR & co) are delegating the majority of their job to SaaS
| and all failures are blamed on the people who have to
| interact with them while they are entirely ancillary to their
| job.
| WarmWash wrote:
| I have a prime example of this were my company was able to
| save $250/usr/mo for 3 users by having Claude build a custom
| tool for updating ancient (80's era) proprietary
| manufacturing files to modern ones. It's not just a
| converter, it's a gui with the tools needed to facilitate a
| quick manual conversion.
|
| There is only one program that offers this ability, but you
| need to pay for the entire software suite, and the process is
| painfully convoluted anyway. We went from doing maybe 2-3
| files a day to do doing 2-3 files an hour.
|
| I have repeated ad-nausea that the magic of LLMs is the
| ability to built the exact tool you need for the exact job
| you are doing. No need for the expensive and complex 750k LOC
| full tool shed software suite.
| magicalist wrote:
| > _It 's not just a converter, it's a gui with the tools
| needed to facilitate a quick manual conversion._
|
| is this like a meta-joke?
|
| > _I have a prime example of this were my company was able
| to save $250 /usr/mo for 3 users by having Claude build a
| custom tool for updating ancient (80's era) proprietary
| manufacturing files to modern ones._
|
| The funny thing about examples like this is that they
| mostly show how dumb and inefficient the market is with
| many things. This has been possible for a long time with,
| you know, people, just a little more expensive than a
| Claude subscription, but would have paid for itself many
| times over through the years.
| deadbabe wrote:
| You can use AI for simple stuff.
|
| For everything else, there's open source.
| kube-system wrote:
| Open source doesn't implement, host, and support itself. Some
| of these software companies stocks _are_ companies selling
| open source software.
| coliveira wrote:
| Software developers programmed themselves out of a job.
| They created a huge and growing set of free, tested, high
| quality software in the form of open source, that can be
| use for pretty much anything. LLMs will automate a lot of
| the remaining pieces.
| deadbabe wrote:
| Programming yourself out of a job, is the final, most
| important command of a job.
| 9rx wrote:
| Foundational software requires that, but the foundation is
| pretty much completely built at this point. The workforce
| required to keep it running is but a tiny fraction of what was
| required to build it. The past has shown that innovation in
| hardware can push for the foundations to be rebuilt, but we've
| also already got computers basically everywhere now. There may
| not be some new innovation that requires the foundations to be
| completely rewritten again.
|
| The little one-off programs that we thought would keep
| developers busy forevermore don't require engineers. They often
| don't even require code. LLMs can natively do a lot of things
| that historically would have required software.
| manmal wrote:
| Such black and white thinking. Even the little tools fall
| apart at first sight of an edge case if they are fully vibed.
| Neither Opus nor codex are good at architecture, and it's not
| clear they ever will be.
| 9rx wrote:
| You still seem to be thinking about code in the traditional
| sense. A lot of the software I am using now in my non-tech
| business isn't rooted in code at all. It is simply asking
| an LLM to carry out a task. Still programming, of course,
| but not with a traditional programming language. The LLM
| will produce the excepted results in realtime. The
| intermediary step of building an executable is totally
| unnecessary.
|
| In the olden days it would have taken considerable
| engineering effort to produce a comparable tool. That is no
| longer the case.
| rglullis wrote:
| > AI-generated code still requires software engineers
|
| No, they don't.
|
| A domain expert armed with an Excel spreadsheet and the ability
| to write VBA macros will be enough for most business.
| zdw wrote:
| Excel spreadsheets have little to no validation logic that
| you're actually getting a good result, unless you have a
| secondary check (most spreadsheets are structured as "single
| entry" accounting, so lack the checks)
|
| A prime example of this was the Reinhart/Rogoff paper
| advocating austerity that was widely quoted, and then it was
| discovered that the spreadsheet used had errors that
| invalidated the conclusions:
|
| https://en.wikipedia.org/wiki/Growth_in_a_Time_of_Debt#Metho.
| ..
|
| Just because technology is in use and "works" doesn't mean
| it's always correct.
| rglullis wrote:
| You are taking my comment way too literatlly.
|
| The point is not that people will be using _specifically_
| Excel, but that most business only pay for software because
| it is the tool that gives them the most power to automate
| their processes. They don 't need high availablility, they
| don't need standards compliance, they don't extensive
| automated tests, they won't need cloud engineeers and
| SRE... all you need is some tool that can get the results
| your are looking for _right now_.
|
| Academia already works like this. Software wrtiten for
| academic purposes is notoriously "bad" because it is not
| engineerd, but that doesn't matter because it is good
| enough to deliver the results that researchers need.
| Corporate IT will also start looking like this even at mid-
| sized companies.
| zdw wrote:
| I don't disagree with anything you say here - using a
| tool that lacks guardrails is fine for a lot of tasks,
| but if that's the only tool and used where those
| guardrails go from "nice to haves" to something more
| critical is where the problem is.
|
| I've been in ops for a long time and have encountered far
| too many "our IP addressing plan is just a spreadsheet
| with manual reconciliation".
|
| I truly wonder if Excel and all it's predecessors and
| direct clones (Google Sheets, etc.) are holding back
| industry from making something truly better and more
| reliable.
| rglullis wrote:
| > holding back industry from making something truly
| better and more reliable.
|
| What "industry"?
|
| If you are talking about the software industry, then I'd
| say you are creating a circular reasoning. If you are
| talking about all the other things that we _actually_
| need to do and which only incidentally have become too
| reliant on software to do it, then see back my original
| point: people don 't need "better and more reliable"
| software to keep running their businesses.
| kube-system wrote:
| I guess that's technically true, because "most businesses"
| are sole proprietorships without any employees... but they
| could get by just fine with a checkbook and a note pad.
|
| But the reasons the business software sector grew far beyond
| Excel of the 1990s is because of the inherent limitations in
| scaling solutions built by business analysts inside of Excel.
| There's a vague cutoff somewhere in the middle of the SMB
| market where software architecture starts to matter and the
| consequences for fuckup are higher than the cost of paying
| for professionally made software with, importantly, a vendor
| on the hook for making sure it doesn't fuck up.
| forgetfreeman wrote:
| Uh, no. The main reason the software sector grew in the 90s
| was a particularly potent combination of FOMO, kickbacks,
| and strategically deployed cocaine.
| 1718627440 wrote:
| That's a software engineer that is limited to an mostly
| untyped macro language, with worse version control and poor
| tooling. It's not that software can't be written as an Excel
| spreadsheet, it is that it is just inefficient and failure
| prune.
| keeda wrote:
| Hmm, I wonder if it would be cheaper to hire a couple of
| software engineers to vibe-code custom SaaS apps on top of the
| company's existing data layer instead of paying for a hundred
| different SaaS subscriptions.
|
| Financial considerations aside, one advantage of having in-
| house engineers is that you can get custom features built on-
| demand without having to be blocked on the roadmap of a SaaS
| company juggling feature requests from multiple customers...
| Sleaker wrote:
| I'm at a large company that is building connections between
| all of its different financial systems. The primary problem
| being faced is NOT speed to code things, the primary problem
| at large companies is getting business aligned with tech
| (communication) and getting alignment across all the
| different orgs on data ownership, access, and security. AI
| currently doesn't solve any of this. Throw in needing to deal
| with regulation/SOX compliance and all the progress you think
| AI might make, just doesn't align with the problem domains.
| Shalomboy wrote:
| Agreed. The SWEs already receive a steady supply of
| conflicting demands from every possible business unit; the
| value add for these teams is a working PMO to prioritize
| the requests coming in.
| sublinear wrote:
| This is also generally true for all mid to large businesses
| I've ever worked at.
|
| The code they write is highly domain-specific,
| implementation speed is not the bottleneck, and their
| payroll for developers is nothing compared to the rest of
| the business.
|
| AI would just increase risk for no reward.
| coliveira wrote:
| > getting business aligned with tech (communication) and
| getting alignment across all the different orgs
|
| This is what a CEO is supposed to do. I wonder if CEOs are
| the ones OK with their data being used and sent to large
| corps like MS, Oracle, etc.
| foobarian wrote:
| Makes me wonder if they are getting ripe for disruption.
| Not by a new business model, but a new operating model
| where a CEO will be tech/ai-aware and push through all
| these kinds of things.
| fragmede wrote:
| There's definitely a market for on-prem solutions that
| don't involve sending all your data to someone else,
| while reaping the benefits.
| Sleaker wrote:
| I haven't seen what you're suggesting from a CEO at a
| large company that's primary business is non-software
| related. At some point in a businesses life theres an
| accumulation of so many disparate needs and systems that
| there can be many many layers of cross org needs for
| fulfilling business processes. This stuff is messy.
|
| I think I saw it asserted that its easier for a new
| company, which definitely makes sense as you don't carry
| along all the baggage.
| chasd00 wrote:
| I work in large projects like this, the CEO doesn't get
| involved in the little "computer project" except during
| the project kickoff. Even then, it's just to "say a few
| words about the people I admire on this team". In large
| global companies these projects are delegated 3 or 4
| levels below the CEO at the highest.
| skissane wrote:
| > one advantage of having in-house engineers is that you can
| get custom features built on-demand without having to be
| blocked on the roadmap of a SaaS company juggling feature
| requests from multiple customers...
|
| Many larger enterprises do both - buy multiple SaaS products,
| and then have an engineering team to integrate all those SaaS
| products together by calling their APIs, and build custom
| apps on the side for more bespoke requirements.
|
| To give a real world example: the Australian government has
| all these complex APIs and file formats defined to integrate
| with enterprises for various purposes (educational
| institutions submitting statistics, medical records and
| billing, taxation, anti-money laundering for banks, etc). You
| can't just vibe code a client for them - the amount of
| testing and validation you have to do with your
| implementation is huge-and if you get it wrong, you are
| sending the government wrong data, which is a massive legal
| risk. And then, for some of them, the government won't let
| you even talk to the API unless you get your product
| certified through a compliance process which costs $$$. Or,
| you could just buy some off-the-shelf product which has
| already implemented all of that, and focus your internal
| engineering efforts on other stuff. And consider this is just
| one country, and dozens of other countries worldwide do the
| same thing in slightly different ways. But big SaaS vendors
| are used to doing all that, they'll have modules for dealing
| with umpteen different countries' specific regulations and
| associated government APIs/file formats, and they'll keep
| them updated since they are forever changing due to new
| regulations and government policies. And big vendors will
| often skip some of the smaller countries, but then you'll get
| local vendors who cover them instead.
| tossandthrow wrote:
| That would justify a good multiple of 5 to 10. Not 30 or above
| as for high growth companies.
| louiereederson wrote:
| multiple of what? there is maybe one software company trading
| above 30x revenue - palantir. many companies growing at 20%
| trade at single digit revenue multiples.
| themafia wrote:
| > AI-generated code
|
| AI "generated" code requires a large base of training data to
| draw from. If we all stop writing code then there will no new
| code written. Just rehashes of stolen ideas. There is no long
| tail to this industry or ideal.
|
| > That's very expensive.
|
| As long as you convince someone else to pay the bill who cares?
| The real problem is are you losing your competitive edge? If
| everyone else can crank out the same stolen crap you can then
| there is no reason for you to even exist.
| falloutx wrote:
| Other reason could be that investors think companies are going
| to lay off a lot of their staff and then that will decrease
| Saas revenue anyway.
| freejazz wrote:
| AI-generated code is not copyrightable and therefore cannot be
| protected through a conventional licensing scheme.
| epolanski wrote:
| Atlassian tools for a client like mine (hundreds of employees)
| can easily cover the expense of internalizing it. It's Jira
| plus confluence mostly, it's not rocket science.
|
| And that's just atlassian.
|
| Start adding stuff that costs many many many yearly salaries
| (special software for managing inventories and warehouses) it
| starts making sense to prototype alternatives internally.
|
| I came to the conclusion that if it's not Teams/SharePoint or
| the moat is on the extreme legal complexity side (e.g.
| payrolls), you can at least think of building an alternative
| that is good enough without needing to be perfect.
| bargainbin wrote:
| Don't forget the salary for every dev team having the
| Atlassian Jira Jockey to mess around with the board all day
| and make sure the next 7 epics worth of tickets are in the 9
| columns and in prioritised order.
|
| Where would we be without them!?
| louiereederson wrote:
| jira premium is $15/mo/user for 300 users. you're saying $50k
| can cover developing the app inclusive of integrations,
| maintaining it, providing 24/7 service and 3 9s uptime (per
| the sla)? don't forget compliance and security. maybe the
| logic is everyone can be fired and replaced with agents?
| fragmede wrote:
| Yes. $50k goes a long way outside of the Bay Area.
| julienfr112 wrote:
| I told to my colleague that it would take less time for me to
| vibe code jira that it would take him to configure it. Sounds
| crazy ? Not so much : factor the part of jira you use (maybe
| 10%), the many choices and dimensions you have to configure,
| the time it take and the complexity it bring. On the other
| side, the vibe code version have only the fields you want,
| most of the logic hard written in code (ie epic > story
| >task...), and that you could do anything any role, any
| authentication scheme.
| chasd00 wrote:
| This reminds me of all the "i could turn the spreadsheet
| into a webapp in a weekend" type comments. Sure, you could
| get CRUD and a datatable working but then a user is going
| to ask you for a custom field and you'll say "ok let me
| vibe code that, update the database, and then deploy" but
| the user will say "well in Jira I could just to that
| myself...". Then the next thing they're going to ask is
| some kind of custom workflow utility which you'll then goto
| work vibe coding that feature and they'll say again "...but
| in jira that was already there". Meanwhile they'll ask you
| why they can't change the validation criteria on the custom
| field from before, they said it should be required but now
| there's a case where it's optional.
|
| Pretty soon you're just re-implementing Jira while your
| users wait and get pissed because they could have just been
| using Jira all along. It's just like turning a spreadsheet
| into a webapp, inevitably you just end up trying to re-
| implement Excel.
| Spooky23 wrote:
| Lol. ServiceNow, Oracle, Workday, etc are not small monthly
| fees. That's what the market is shitting on. (Oracle is
| different, given the corruption and OpenAI grift angle.)
|
| My buddy works for a company like these. He landed a $5M
| contract last year, which netted him almost $800k. There's alot
| of fat to be cooked out of this stuff, and AI will help smaller
| entrants attack those margins.
|
| AI-based startups like Vanta make it much easier for companies
| to meet the compliance bullshit the large companies require.
| Again, it will drive more competition == better values for
| customers.
| chasd00 wrote:
| > There's alot of fat to be cooked out of this stuff, and AI
| will help smaller entrants attack
|
| truer words have never been spoken. I work in some of these
| platforms and lead teams of developers who write
| customizations. These customizations are not rocket surgery,
| basic CRUD with some logic requirements that can't be met
| ootb. It's very time consuming and therefore expensive to
| clients. The significant moat incumbents have is brand
| recognition and trust. On the other hand, a hot new "Agent
| First" consulting firm at 1/3 the price would be hard for a
| director to not at least experiment with.
| doctorpangloss wrote:
| Haha, maybe... you can stick your head in the sand all you
| want, but everyone I know whose output is code is delegating
| 100% of their work to Claude Code today, I cannot see this
| magically drawing a line at people whose output is configs and
| emails...
| rstuart4133 wrote:
| > > The fear is that these [AI] tools are allowing companies to
| create much of the software they need themselves.
|
| If that's their fear they don't know much how your typical big
| businesses functions.
|
| You've dealt with a large, consumer bank? Many of them still
| run on IBM mainframes. The web front end is driven by pushing
| buttons and screen scraping 3270 terminal emulators. You would
| think a bank with all it's resources could easily build it's IT
| infrastructure and then manage all the technology transitions
| we've gone through over the past few decades. Clearly, they
| don't and can't. What they actually do is notice they have to
| adapt to the newfangled IT threat, hired hordes of contractors
| to do the work, then fire them when done. After it's done they
| go back to banking and forget all the lessons they've learnt
| about building and managing IT infrastructure.
|
| If you want to see how banking and computers should be
| combined, look at the Fintech's, not banks. But for some reason
| I don't understand traditional banks still out compete
| Fintech's. Maybe it's getting your head around both banking and
| running an IT business it too much for one human mind?
|
| That same pattern is repeated everywhere. Why was everyone so
| scared of Huawei? It wasn't because they built the gear. It's
| because the phone telco's have devolved into marketing and
| finance companies who purchase in the gear from companies like
| Huawei and rent it out. Amazingly they don't know how to run
| the gear they purchased, instead get the supplier to install it
| and maintain it. But that meant what some eyes viewed as an
| organ of the Chinese communist party was running the countries
| phones with full access to every SMS and voice call.
| (Interestingly, IBM pulled the same stunt with the banks back
| in the day: you didn't buy an mainframe, you leased / rented it
| from IBM, and they maintained it.)
|
| It's the same story everywhere I look. These big firms stick to
| the knitting. If you want to see total, utter incompetence in
| IT go work whose core business doesn't revolve around IT for a
| while. These are the firms that still choose Microsoft, despite
| the fact they've seen Sony's Microsoft based IT infrastructure
| torn apart so badly by North Korea they didn't know who their
| employees were, how much they owed creditors or how much
| debtors owned them for a while. Why do they choose Microsoft?
| Look around - who else allows you to outsource the know how
| about connecting millions of computing devices in 1000's of
| offices to a redundant cloud infrastructure that allows them to
| share data while providing a centralised authentication /
| authorisation infrastructure. There is only one choice, apart
| from developing it themselves which is out of the question.
|
| If those businesses did start using what passes for AI today to
| manage and develop their own IT infrastructure, the result
| would not be pretty. But for all the shit I'm throwing at them
| here, I'm confident they are smarter than that. They know their
| limitations, they haven't done it before, and they won't start
| doing it now.
| poulpy123 wrote:
| Maybe just maybe, the markets are not as rational as these people
| think they are
| jeroenhd wrote:
| Reminds me of that time when Nintendo's stock exploded after
| the launch of Pokemon go, only for traders to discover a few
| hours later that Niantic actually owned the game and correct
| the situation.
| zamadatix wrote:
| Nintendo is one of the three 1/3 owners in The Pokemon
| Company and an early investor in Niantic. I'd be curious how
| much was actually confusion as to who is making money vs just
| a normal hype cycle. I'd also be curious how much the game
| itself made the various owners vs what Nintendo made on the
| general interest in other Pokemon games/merchandise from the
| launch.
|
| At the very least, the stock looks to have shot up for most
| of the launch month with the peak not occuring until July
| 18th and the stock still being significantly higher at the
| end of the month https://finance.yahoo.com/quote/NTDOY/histor
| y/?period1=14673...
| iamleppert wrote:
| Meanwhile, in the real world, as a software developer who uses
| every possible AI coding agent I can get my hands on, I still
| have to watch it like a hawk. The problem is one of trust. There
| are some things it does well, but its often times impossible to
| tell when it will make some mistake. So you have to treat every
| piece of code produced as suspect and with skepticism. If I could
| have automated my job by now and been on a beach, I would have
| done it. Instead of writing code by hand, I now largely converse
| with LLMs, but I still have to be present and watching them and
| verifying their outputs.
| eknkc wrote:
| Yeah but just look at what happened within the last 2 years. I
| was not convinced about the AI revolution but I bet in another
| 2 years, we won't be looking at the output..
| polotics wrote:
| Not so sure, there are indiosyncracies now within the various
| models, I suspect all this is the result of RLHF, and they
| cause side.effects. I'm not sure that more attention-is-all-
| you-need is necessarily going to give us another step change,
| maybe more general intelligence, but not more focus. Possibly
| also we soon end up with grokked AI's on all side: pushing
| their agenda whatever you asked... Gemini: "no this won't
| work with Cloudflare, I created your GCP account, there you
| go" OpenAI: "I am certain you really wanted me to do all
| these other tasks and I have done them, you should upgrade
| your tokens plan" etc (you know how to fill in for DeepSeek
| and Grok already, right)
| falloutx wrote:
| Tech can always hit a plateau, here's to hoping anthropic &
| openAI run out of money.
| headcanon wrote:
| I've been coming around to the view that the time spent code-
| reviewing LLM output is better spent creating
| evaluation/testing rigs for the product you are building. If
| you're able to highlight errors in tests (unit, e2e, etc.) and
| send the detailed error back to the LLM, it will generally do a
| pretty good job of correcting itself. Its a hill-climbing
| system, you just have to build the hill.
| grwbx wrote:
| What an odd article that is just designed to hype the software
| creation aspect, which doesn't really affect MAGAF.
|
| MSFT went down because of overexposure in AI and because it is
| clear that people do not want it.
|
| AI weariness is a thing, and if people go off the Internet or
| advertisers question whether humans or AI swarms are "watching"
| their ads it is over for the big players.
|
| Trying to salvage the situation by hyping the relatively small
| code generation (theft) aspect is quite a poor analysis.
| likium wrote:
| HN crowd did not like AI coding until it got better. How much
| of the AI hate is because of poor implementation?
| falloutx wrote:
| I guess you can classify over-implementation as poor
| implementation.
| nonethewiser wrote:
| Yeah the article doesn't make a lot of sense to me. Guess whose
| writing software with AI? Software companies.
|
| They mention sites like Base44 and Lovable. Sure, if tons of
| business was rotating out of software into no code AI solutions
| the article would have a point. But has a large portion of
| market cap moved out of AI into a few little no-code startups?
| Is Salesforce, Service Now, and SAP being replaced with no code
| applications? No. Absolutely not. These are small, niche
| companies. It does not explain a large downward movement in an
| entire industry.
| pixelpoet wrote:
| What an odd account that is just created to try sway opinions
| on hot button topics.
|
| Where have I seen this before? Oh right, the entire site, for
| months now. Nothing suspicious about that at all, I'm sure a
| swarm of other brand new accounts will reassure me 0.1
| microseconds after being created. You guys sure do type fast!
| cal_dent wrote:
| yes, its continue to grow at as problem. Doesn't detract from
| the site as a whole, but there is more very very low value
| noise infiltrating in a way there hasnt been in the past -
| even in the relatively short time I've been here.
| flerchin wrote:
| Is the pummeling in the room with us right now? YoY looks
| phenomenal in my portfolio.
| dmoy wrote:
| This article I think is about a very specific subset of
| software stocks.
|
| If you're holding say a total market index fund, or s&p500, or
| even qqq or many tech index funds, this would get hidden by the
| so-far very good growth on other tech stocks.
| TSiege wrote:
| I'd look at things beyond the magnificent seven. Economists and
| traders have noticed that the SP 500 now has a K shape similar
| to our class wealth distribution.
| https://fortune.com/2025/11/10/markets-k-shaped-economy-apol...
| _pdp_ wrote:
| I was one of the nay sayers but right now I am convinced.
|
| That being said, it still requires some engineering background to
| come up with interesting ideas and solutions with the help of
| LLMs but even that might be replaced.
| luke5441 wrote:
| So you disagree with the article? Could you explain your
| reasoning?
| wtp1saac wrote:
| Certainly no investor, but my own feelings:
|
| AI replacing vendors feels like a strange risk, though I'm not
| sure if vendors view things through a technical lens. Security
| concerns and service maintenance alone, IMO, makes writing
| internal software a large proposition - one that I would want a
| trusted vendor if it wasn't a hobby project and I could just
| afford that. Particularly if that data being lost or broken would
| severely harm a business.
|
| There are also already frameworks in languages like Python that
| make putting up an internal website very, very simple. If you
| don't need production grade, you might have already had a pretty
| low barrier to entry, if you have the skills to figure out how to
| host the service you just vibe coded, you can probably figure out
| some basic django to throw data in its ORM, or find libraries
| that do the work for you.
|
| AI does feel in those technical ways to be an overstated risk, to
| me at least.
|
| Far more worrying to me is the breakdown of the USA and its role.
| We are going to have blocs of software and hardware entirely from
| competing geopolitical regions, which may not be able or
| authorized to communicate with one another. Any businesses in the
| USA with significant CA or EU marketshare right now will decline
| in value to the degree client companies choose, or are told, to
| stop using USA systems.
|
| (My own governor in California outright antagonized the Europeans
| at Davos calling them "pathetic" while telling them to get tough
| on Trump, which means in practice, stop using US, meaning yes
| California, tech goods and services. A lot of revenue from tech
| comes from overseas, and we are going to lose at least some
| portion of that. Particularly in California which already has
| budget problems with what revenue it's got. Stunning how even The
| Guardian treated those remarks as "tough" and not insane and
| self-destructive... sadly it's nothing compared to the worst of
| the US right now.)
|
| So, where do you throw investment right now? To the US where the
| marketshares will likely decline, and the political and trade
| environment is insanely uncertain, but there is momentum on AI
| and generally decent hardware design, and the existing software
| companies and knowledge? To the EU or Canada where maybe a
| nascent software industry will take hold, or perhaps American
| companies will relocate talent if the USA collapses into civil
| conflict? To China, if they end up becoming a hegemon, given
| their strength in hardware and their growing efforts to invest in
| software alternatives?
|
| I suppose I read markets don't react to "tensions," and maybe it
| is unprecedented to modern memory, but I think about these things
| more than AI.
| wtp1saac wrote:
| I would add: open source throws additional curveballs. The EU
| wants to push for open source, and that is admirable, but I
| wonder what the sustainable funding model would be, and how
| that could attract attention. I wonder about business models
| and ability to generate return on investment.
|
| I would think the saner solution is allowing proprietary
| companies, but imposing technical standards which companies
| collaborate on, enabling interoperation. Am I mistaken, that
| the EU is trying to do this with the DMA? I have heard general
| overtones, but I haven't looked at it very closely, and our
| media doesn't cover EU tech regulations in much detail in the
| US, though in a decent world it would, I wish it would.
| SimianSci wrote:
| The Value of software is going down, this much is clear to most
| people. It will continue to demand proper engineering for its
| creation and operation. But AI will lead to an increase of unique
| one-of-a-kind systems created by very small teams. And the world
| will increasingly rely on these unique systems.
|
| SaaS companies need to start reading the writting on the wall,
| their massive valuations enjoyed when software was harder to
| create will need to be justified.
| themafia wrote:
| > this much is clear to most people.
|
| There are more computers now than there ever have been. More
| people in more parts of the world have them than ever before.
| If you have this perspective you may just be locked in a first-
| world corporate nightmare that has stolen from you all vision
| and imagination.
| KellyCriterion wrote:
| TRUE! Actually the world around is controlled already by
| computers ~ chips: Your car, your dishwasher, your metro,
| your holidayjettravel etc.
|
| And it becomes "worse": Billions and billions of chips ~
| compusters are produced every year, the number is increasing.
|
| Billions of people will get access to the stuff that was
| around for us "since ever" for the first time in their whole
| life.
| SimianSci wrote:
| Perhaps the it would be better described as "commodification"
| of software, which still gets my point across. Software is
| absolutely more ubiquitous than ever before, this I can agree
| upon. But now we have the tools to create more of it, and
| therefore software is less valuable simply as it is less
| rare. I dont mean to say that software is valueless, but
| rather that it enjoyed inflated value as the amount of
| capital and effort required to build a software product was
| much greater.
| nonethewiser wrote:
| I dont actually think it changes the economics of software as a
| service much. What's true for the small scale is true for the
| large scale. Sure, it's easier to build your own HR platform
| now but it's also easier to write and maintain it at scale with
| all your domain knowledge, legal infrastructure, etc. This
| seems true for inventory management, document signing,
| ecommerce, expensing, crm, training, accounting, etc. Why
| wouldn't the offerings from services providers get better and
| cheaper (relatively)?
|
| The stuff you do in-house is probably still going to tied
| deeply to your internal processes. Admin dashboards, special
| workflows integrating with different systems, etc.
| SimianSci wrote:
| Consider it in the realm of supply and demand. The economics
| of software will change simply because the tool enables more
| software to be written. In a way, the barrier of entry into
| the space of selling software has lowered. It hasnt vanished,
| but there will be many more entrants and offerings as a
| result, thus more competition for the existing SaaS
| companies.
|
| I don't see how the economics of SaaS will remain the same
| when their value is formed of capital and labor expended,
| both of which require less now, so please explain how this
| doesn't lead to an increase in supply and a downward pressure
| on value?
| falloutx wrote:
| Everyone says that but I don't see anyone cooking up the next
| photoshop and selling it at $3/month. Why are we not seeing
| more options of every tool? Most Saas companies are sales
| companies at their core rather than software companies. And
| those sales people are so good that they can sell a todo list
| for millions.
| coliveira wrote:
| In the case of Photoshop it is the software itself that is
| becoming useless. In a few years, using photoshop will be
| viewed the same as developing physical film, a process from a
| by-gone era that is still possible, but impractical.
| gmueckl wrote:
| This is an extremely bold claim and I think that it
| completely overlooks how Photoshop is used by professionals
| in practice. Professional users want extremely fine grained
| and precise control over their tools to achieve the
| specific results that they want. AI "image editing" is
| incapable of providing anything remotely similar.
| coliveira wrote:
| Yes, "professional users" need this. The problem is that
| the group of professional users who need that will shrink
| really fast in the next few years.
| kulor wrote:
| I've recently re-instated a Photoshop subscription and its
| now part of my core AI generated asset workflow. AI is
| fantastic at art direction but it needs minor adjustments
| to make it production ready. E.g putting real screenshots
| in with correct placement, smoothing, editing out artefacts
| etc. I can't imagine the lengths I'd have to go to to
| instruct an LLM to do these tasks with words.
| esafak wrote:
| Some of the LLM crowd is living in lala land.
| walkersnice wrote:
| > Everyone says that but I don't see anyone cooking up the
| next photoshop and selling it at $3/month. Why are we not
| seeing more options of every tool?
|
| I expect the markets are reflecting that soon there will be
| more competition.
|
| It'll take time, and as LLMs improve, it'll take even less
| time.
| larodi wrote:
| No, they dont distrust AI, they now may start to distrust all the
| big service providers that are likelty to eventually be
| eradicated by AI now that everyone can prompt a browser. This
| perhaps will also finally kill Microsoft Access, which is the
| closest to AI doing the work instead of you for so long. Then all
| the do-it-yourself enterprise-grade systems became SAAS, so its
| right for SalesForce and friends to go fck themselves once in a
| lifetime for standing in the way of actual software ownership.
|
| I know, you are saying - they will adopt. Perhaps, while also
| cutting 40% (if not more) personnel during the pivot, and perhaps
| also by facing more challenges by faster moving competition.
|
| Like, look for a second - why didn't Google create what the
| perplexity newsfeed is, given they actually like did 10 years ago
| and then close to nobody was using it. The equilibrium seems
| super unstable. What happens if a smart kid devices way to
| compress this information 10x times faster. This immediately
| means neural chips stall.
|
| This volatility is something, not a joke. The second order
| effects may be unforseeable in an unparalleled way. Besides, the
| Luddites organize much better in 2026 given reddit etc.
| mempko wrote:
| This article crystallizes something I witnessed firsthand last
| week.
|
| Overheard a guy at a restaurant explaining how he builds phone
| apps with AI and no coding experience. When asked how he verifies
| the code works, he said he pastes it into a different AI to
| explain it.
|
| That's the "slopware" problem in action. The code compiles. It
| might even work. But there's no understanding of what it's
| actually doing, no ability to debug when it breaks in production,
| no awareness of the technical cruft accumulating with every
| prompt. That's a problem for people creating software for others
| and is a huge opportunity for software developers to take
| prototypes and build real stuff.
|
| Does anyone remember the RAD days of the 90s?
|
| On the flip side, for people making software to solve THEIR
| problems, they don't need to make anything production quality.
| Its for a single user, themselves! Maybe the LLMs are good enough
| now that people don't need to buy or subscribe to software that
| solves trivial problems as they can build their own solutions.
| Maybe the dream of smalltalk, hypercard, and even early web where
| anyone can use the computer of what it was meant for is finally
| here?
| christkv wrote:
| Thats fine Ill charge him 500 bucks an hour to fix it if it has
| success and he runs into not being able to maintain it
| elorant wrote:
| Because the bubble has began to burst.
| raincole wrote:
| _take a look at 5-year trend_
|
| It's just correction.
| Noaidi wrote:
| But it is not THE correction.
| trgn wrote:
| the crash is indiscriminate, which is really disheartening. even
| infra software is getting demolished, no llm is going to replace
| something like mongodb, but it's all traded under the same
| umbrella.
| christkv wrote:
| The cleanup needed after this by senior developers will be epic.
| falloutx wrote:
| Most of the these companies wont survive because of thier
| stupidity anyway.
| francisofascii wrote:
| The iShares Expanded Tech-Software Sector ETF (IGV) seems to
| backup what the article is saying. It isolate software firms from
| the IT industry. It is down about 10% last week, and 20% down the
| past six months. The IT sector as a whole didn't lose much.
| FireBeyond wrote:
| I used to work for ServiceNow.
|
| Market Cap over doubled between 2021 and 2025.
|
| But since the start of 2025, it has lost _all_ of that.
|
| 13% in the last week. 20% in the last month. Six months is
| definitely bleaker than those numbers, 37% down.
| agentultra wrote:
| ... because they've been driven by years of bad leadership,
| monopolistic scheming, and investor speculation?
|
| AI is just the latest symptom, IMO.
|
| We normalized growth over revenue. Governments around the world
| have been pressured by Big Tech to dismantle anti-trust and
| regulation. We glorified shipping slop, suppressing unions, and
| pretending like programmers were temporarily embarrassed
| founders.
|
| The stocks are dropping because our system can't sustain these
| practices, IMO.
| dzonga wrote:
| investors are panicking.
|
| however those system of record apps - will outlast most "A.I"
| companies - since the effective data is within their systems
| gwbas1c wrote:
| I wonder when a "virtual person" will be able to replace
| carefully-coded business software?
|
| IE, before software automates a business process, it's typically
| done by hand, by a real person.
|
| What if someone sells a "virtual person" that's capable of doing
| the job? What if that "virtual person" is harder to train than a
| real person, but orders of magnitudes easier than writing custom
| software or custom business rules?
|
| More importantly: What if the "virtual person" can explain the
| job they do much better than trying to read source code? That's
| very useful in ~30ish years when the "virtual person" understands
| the business process better than the people in the company, and
| someone is trying to update / streamline processes.
| paxys wrote:
| Is it AI or just the market realizing that some of these
| companies were ridiculously overvalued to begin with.
|
| Here are the p/e ratios of companies mentioned in the article,
| _after_ the said "pummeling":
|
| * ServiceNow - 70.66
|
| * SAP - 28.70
|
| * Salesforce - 28.15
|
| * Workday - 73.16
|
| * Microsoft - 26.53
|
| So they range from "a bit high" to "still completely bonkers".
| alexpotato wrote:
| So one thing that hasn't changed is that the marginal cost of
| software is still effectively zero. That's where most of the
| money was being made b/c if you were a monopoly or oligopoly that
| each additional unit sold was an absolute increase in revenue and
| you spread out your fixed costs.
|
| What has changed most dramatically is the "fixed" cost of writing
| the software to begin with. Given that the costs were being
| spread out over so many units beforehand, it's not entirely clear
| to me how that changes a lot of the economics.
|
| For the comments about the "SaaS vs build your own", we can use a
| home services metaphor. Sure, I can do a lot of what my plumber
| does. But they do it faster, know all of the issues that go wrong
| with the work and I can pay them a yearly fee to check my boiler
| to make sure it doesn't fail etc. The time saved by calling the
| plumber can then be spent with kids, more work or a combo of the
| two.
| walkersnice wrote:
| I think the idea is that SAP/ServiceNow will be subject to more
| competition, if/when software is cheaper to write.
|
| Their lead has shrunk, and thus so has their value.
| keithnz wrote:
| Other than smaller SaaS companies who offer things easily
| replaceable, I don't think many of the bigger ones can be
| replaced by AI, if anything, it might make them better. For
| instance I can't see us replacing our ticket management/support
| software, hosting, manufacturing/sales/stock software, accounting
| software, etc but it would be great if we could leverage all
| those tools better via AI (some are already easy to leverage).
|
| The interesting thing I've noticed is software library authors
| could take a beating though. Quite a few libs in the .NET world
| have gone down the monetized paths, for all of the ones I've been
| using, I've just got AI to remove them and implement native
| solutions. But none of these are large listed companies.
| jbjbjbjb wrote:
| There's only so much investable capital available, if it is going
| to hardware stocks it's got to be coming from somewhere else.
| It's just a substitution toward hardware tech stocks. Economics
| 101.
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