AI SaaS investing

When all is said and done, and the final accounting is made of all human ambitions and achievements and follies, and the final historian turns to that strange realm of human endeavor that we call “computing,” that strange enterprise that gradually grew to encompass an unbelievable share of human life and redefine the entire world around its logic

If that loop closes, and the labs keep that capacity in-house, everything is on the table. Canva’s proprietary models become a 220-person research team competing against an AI that can improve its own architecture. Figma’s API dependency becomes irrelevant because the APIs point to something so far beyond current frontier models that the... See more

Figma could, in theory, make the pivot. It has enough R&D spending (97.53% of revenue!) to fund a proprietary model research program ten times over. The question is whether it starts now or waits until the margin compression forces the decision.

Software stocks are trading at P/E ratios at ten-year lows while their current fundamentals remain strong. That is precisely the signature of a market repricing terminal value, not current earnings. Whether it is overdone depends on whether the next wave of earnings calls shows actual churn or accelerating growth despite the fear.

Classic software has hit its “late maturity” phase. TAMs have been exhausted, competition is up, and the entire industry’s growth rate will collapse, eventually to that of GDP growth, faster than most think. Because of this, the entire sector should trade on GAAP P/E multiple, like the other “late maturity” industries facing disruption.