Betting Against AI Panic
+1.6%
since Sep 19
The idea
I think the market is overreacting to AI wiping out entire categories of software and services businesses, so I built a basket of the stocks hit hardest by that fear alongside a few names down for separate, fixable reasons. It owns AI-disruption targets in software and IT services, an ad-tech name caught in the same panic, a handful of unrelated laggards, and a software-sector fund for ballast, with 10% held in cash. I'm betting these companies adapt to AI faster than the market expects and the discount narrows over the next year or two; I'd rethink this if revenue growth actually breaks down.
What it owns
- Established software makers fell on fears that AI replaces them, even while their core revenues keep growing and customer bases remain intact. · IntuitThe market prices Intuit as if AI replaces tax and accounting software, ignoring that AI improves these products and cuts costs before disrupting customer relationships., AdobeAdobe was sold on the idea that image and video generators make Photoshop and Premiere obsolete, but the company integrates these tools into professional workflows professionals already pay for., SalesforceSalesforce fell on fears that AI agents replace seat-based software, but the company can fold generative AI into existing products and grow revenue from current customers., WorkdayWorkday was sold on fears that AI shrinks corporate headcount and the per-employee subscription fees the company charges, but large organizations keep these systems regardless.27%
- Consultancies and research firms help clients deploy AI systems rather than compete with them, so client spending on implementation drives these businesses forward. · AccentureInvestors believe AI writes code and eliminates Accenture's role, but large companies still need skilled people to install and deploy AI systems across their operations., Cognizant Technology SolutionsCognizant carries outsourcing fears that AI eliminates routine IT work, but clients are more likely to redirect that spending toward AI projects Cognizant can execute., GartnerGartner fell on the idea that executives use chatbots instead of research subscriptions, but confusion around AI spending decisions makes paid expert advice more valuable., EPAM SystemsEPAM sells custom software engineering, the exact work AI coding tools supposedly erase, but demand for engineers who direct AI systems is rising, not falling.23%
- These companies fell on fixable business problems like spending, competition, or execution issues, not on broken franchises or structural AI disruption. · Lululemon AthleticaLululemon fell on slowing growth and competition, classic brand execution issues unrelated to AI, with potential fixes in product refresh and international expansion., Boston ScientificBoston Scientific dropped on company-specific problems unrelated to AI, while demand for medical devices and procedures remains steady and fixable issues persist., CoStar GroupThe commercial real estate data business remains sound despite heavy spending on a residential expansion that pressured margins; margin recovery hinges on spending discipline., InsuletInsulet was sold on fears that weight-loss drugs shrink the diabetes market, but insulin-dependent patients still require pump therapy and user growth continues.21%
- This ETF owns the whole software group, so it captures gains if the AI-panic discount closes across the sector rather than in isolated stocks. · iShares Expanded Tech-Software ETFThis ETF holds the entire software group, so it rises if the AI-panic discount closes broadly across the sector over the next one to two years.10%
- Advertising platforms got caught in the AI-disruption selloff despite continued growth in ad spending and ongoing demand for their services. · The Trade DeskThe Trade Desk was sold on fears that AI answers destroy the open web and its advertising, but ad dollars still need independent buying platforms for streaming and internet audiences., AppLovinAppLovin fell despite its ad engine still growing fast, a pure case of panic discount in advertising technology unrelated to fundamental business deterioration.9%
- Cash10%