A masterclass in reading panic |
| |
|
This week’s insights include: |
- Software stocks were written off as AI casualties: Earlier this year, fears that AI would make traditional software obsolete sent much of the sector tumbling. While the situation is still unfolding, companies like ServiceNow, Atlassian, and Cadence Design Systems have had a recent resurgence in their valuations.
- AI won't kill software, it needs it: The turning point appears to have stemmed from a view shared by Nvidia's Jensen Huang, that more AI agents means more software... not less, since every agent still needs tools and platforms to work within.
- The real lesson is how to read a panic: It's a case study in separating genuine business risk from fear-driven selling, from spotting when the story races ahead of the fundamentals to catching "circular selling", where stocks fall simply because stocks are falling.
|
|
|
This week's Market Insights article is a 10 minute read! |
|
|
Earlier this year, it looked like the software industry was facing its own extinction event. The thinking had shifted to a simple question: if AI can design and automate the work we've traditionally used software for, what purpose does it serve going forward? Then Jensen Huang (Nvidia's CEO) flipped the script. The narrative that software would be Blockbuster'd by AI was rejected by the very person who arguably stands to benefit the most from AI's rise. Now, the story is by no means over. We still don't know which companies are genuinely insulated and which could end up being the next Kodak. But that's exactly why I think this week's Market Insights is worth your time. It captures the irrationality of markets as they swing from one narrative to the next, and the opportunity sits in an investor's ability to discern the noise from the substance. The recent software cycle is a case in point. Sincerely, Mitchell Lawler, Senior Investment Editor |
| | | “There's this notion that the tool in the software industry is in decline, and will be replaced by AI... it is the most illogical thing in the world, and time will prove itself” |
|
|
Here’s a quick summary of what’s been going on: |
- OpenAI signals it could go public within a year, fuelling the AI listing wave.
- Bitcoin's drop below US$60,000 sparks a flurry of bets on crypto stocks.
- Frasers makes a US$2.3 billion bid for full control of Hugo Boss.
- Comcast commits over £6 billion to bring Universal Studios to the UK.
- Novo Nordisk and Eli Lilly square off for the next phase of the obesity market.
|
|
|
|
Join the discussion by leaving a comment! |
Did the market overreact to AI, or is it still a real threat to software businesses? |
| |
|
|
Tuesday 🇯🇵 BoJ Interest Rate Decision Forecast: 1.0%, Previous: 0.75% Why it matters: A BoJ hike would narrow the interest-rate gap between Japan and other major economies, which matters for the yen and carry trade positioning. 🇦🇺 RBA Interest Rate Decision Forecast: 4.35%, Previous: 4.35% Why it matters: Markets expect the RBA to hold rates steady, after a series of rate hikes. |
Wednesday 🇬🇧 Inflation Rate YoY Forecast: 3.1%, Previous: 2.8%
Why it matters: A rebound in inflation could reduce expectations for near-term BoE rate cuts and keep pressure on UK borrowing costs. |
Thursday 🇺🇸 Fed Interest Rate Decision Forecast: 3.75%, Previous: 3.75%
Why it matters: Markets expect the Fed to hold rates, so the main focus will be on the statement, projections and Powell’s press conference. 🇬🇧 Unemployment Rate Previous: 5.0%
Why it matters: A weaker labour market could increase pressure on the BoE to cut rates, while sticky wage or employment data could delay easing. |
Friday 🇯🇵 Inflation Rate YoY Forecast: Not shown, Previous: 1.4%
Why it matters: Japan inflation is key for BoJ policy. Stronger inflation would support further rate hikes. |
|
|
|
Trusted by 7M+ Investors | Download the app |
This email is from Simply Wall Street Pty Ltd
Level 5, 320 Pitt St Sydney 2000, NSW, Australia. |
Simply Wall St has no position in the company(s) mentioned. Simply Wall Street Pty Ltd (ACN 600 056 611), is a Corporate Authorised Representative (Authorised Representative Number: 467183) of Sanlam Private Wealth Pty Ltd (AFSL No. 337927). Any advice contained in this email/website is general advice only and has been prepared without considering your objectives, financial situation or needs. You should not rely on any advice and/or information contained in this website and before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice. Please read our Financial Services Guide before deciding whether to obtain financial services from us. |
|
|
|
|
|
|
|
