MarketMoodz
Sambur: AI-Driven Software Slump May Persist with Unknowns
David Sambur told CNBC that the AI disruption could push software stocks lower even as the market rebounds. He says investors are re-evaluating software revenue and gross-margin models amid intensifying AI-driven competition, with large unknowns about 1-5 year trajectories.
Key Takeaways
- AI lowers the cost to compete, increasing competitive pressure and squeezing software margins.
- Investors are re-evaluating software revenue and gross margin models amid AI disruption.
- The IGV Software ETF rebounded in March but remains down for the year.
- Intuit, HubSpot and Salesforce have buyback activity; Jaluria warns buybacks could crowd out M&A and R&D.
People Involved
- David Sambur Co-Head of Private Equity, Apollo Global Management
- Rishi Jaluria Senior Analyst, RBC Capital Markets
Entities Involved
- Apollo Global Management Investment firm
- Intuit Software company
- HubSpot Software company
- Salesforce Software company
- RBC Capital Markets Investment bank advisory
- Anthropic AI safety and research company
- OpenAI AI research and deployment organization
- IGV Software ETF iShares Expanded Tech Software Sector ETF
MarketMoodz Analysis
For investors, the takeaway is that AI-driven disruption poses a structural risk to software and cloud names, which can compress valuations, cash flow visibility, and equity risk premiums. Monitoring data points like the IGV price action and software-buyback dynamics matters for portfolio construction and hedging.
Historically, software cycles have faced major shifts from platform transitions like cloud to AI-enabled platforms. If AI reduces cost-to- compete while expanding competitive pressure, 1-5 year earnings trajectories become less predictable, favoring companies with durable moats and recurring-revenue models. Investors should watch capital allocation signals (buybacks, M&A, R&D) and how they intersect with AI-driven capex and margin trends.
Source: Original Article
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