Savvy Trades and Investments

[maxluke1]

This Bloomberg article is the far end of this thought:
https://www.bloomberg.com/news/articles/2026-02-16/fund-beating-99-of-peers-sees-few-software-firms-surviving-ai

Here's a couple of AI summaries because the article is behind a paywall:

According to Polar Capital's Nick Evans, competition for established application software firms will come from three primary sources:
-Corporate Clients: The biggest shift is clients using advanced AI coding tools to develop in-house software tailored to their specific needs, allowing them to bypass expensive prepackaged subscriptions.
-AI Startups: A new wave of agile startups is entering the market, leveraging powerful generative AI models to replicate or improve upon the functions of established giants at a lower cost.
-AI Giants & Coding Tools: Sophisticated tools like Anthropic’s Claude Cowork are now capable of replicating and modifying existing software code so efficiently that they threaten the "competitive moats" of traditional firms.
Evans warns that because "software in its simplest form is a way of humans interacting with data," generative AI can now perform these tasks better than many existing software packages.


The piece profiles Nick Evans, a fund manager at Polar Capital, whose $12 billion global technology fund has outperformed 99% of peers over one year and 97% over five years. Evans sold software stocks before the broader market caught on, and his warning to would-be bargain hunters is blunt: most software shares are still toxic and few companies will survive. Yahoo Finance
Application software — the kind that helps users write documents or manage payrolls — looks particularly at risk, in Evans's view. He has sold virtually all of his holdings in the sector, including SAP, ServiceNow, Adobe, and HubSpot, retaining only a small position and some call options in Microsoft. Taipei Times
Evans holds a neutral stance on cybersecurity software, seeing no immediate AI threat there. In total, less than 7% of his fund is invested in infrastructure software and cybersecurity stocks — the two areas he considers relatively safe. Taipei Times
Outside those niches, Evans expects most software firms to go the way of newspapers in the early 2000s, when print media was decimated by the internet. He urges investors to be "significantly underweight application software" and to act quickly, warning that "as the models get better, the disruption is accelerating." Taipei Times
The backdrop: fears that sophisticated AI tools will disrupt software businesses have sent the sector's stocks tumbling — an ETF tracking the US software sector is down 22% — while semiconductor stocks have soared, as AI drives computing demand. Yahoo Finance
In short, Evans's view is that the AI disruption of traditional software isn't a future risk to price in gradually — it's already happening, and most of the industry won't make it through.