Jeff Lawson

You recently updated your 2023 paper, AI and the Declining Cost to Create.

Your thesis is now playing out in real time.

You've been writing, when AI can write software, the cost to create software plummets.

I believe the market is starting to question the terminal value of these businesses.

I will be more challenging, it will be more challenging for companies

who are not AI native.

So how much longer could this pressure build for?

You know, I think, again, when the terminal value is changing and you don't really know what the end point is, it's difficult to put a multiple on these stocks.

Now, I would say that we're getting a little bit of a phenomenon of the babies getting thrown out with bathwater.

in that all stocks are going down regardless because there is such a fear factor right now when not all of the software stocks are created equal, right?

And there are going to be some beneficiaries, but one thing is for sure, the entire industry needs to rethink.

And, you know, something that the Shopify CFO said this morning that I thought was really interesting is he wrote, he said the rules of what is possible are being rewritten later.

real time.

And I think that's what you're seeing is when you can create bespoke software on the fly, and that's today, what happens five years from now when these LLMs and these self-coding mechanisms are actually even more powerful by orders of magnitude?

So anything digital, any digital asset, you must call to question as to what is its future.

But this knee-jerk of sell first, ask questions later, what questions are you now asking to decide where you can bottom pick, which ones aren't going to be disrupted?

So I think it becomes, again, a very much a stock picker's market because there are, you have to understand the architecture of how some of the software is actually being built.

I would say things like point solutions that are in the small to mid cap space, very difficult to own because that kind of end market that they're addressing can easily get usurped by companies that are bigger or adjacent businesses.

So it's very difficult to own some of those.

I think companies that are larger cap, more platform-like companies, parts of those businesses are at risk.