r/valueinvesting
Could SAAS actually have a comeback after the Friday pullback
Author argues SaaS will bounce back as bearish sentiment is overdone and capital rotates from chips to other sectors.
- Market pessimism towards SaaS is overdone and the bearish thesis is fundamentally flawed.
- Funds are rotating away from chips, creating potential inflows for other sectors like SaaS.
SAAS looked like it had a comeback mid last week but went down again.
Now since the latest pullback, money has to move somewhere. From what I am reading, looks like it will move away from chips to healthcare, consumables etc, financial etc.
What is your thesis on if SAAS could bounce back from here - NOW, CRM, TEAM, INTU etc
Honestly, Saaspocalypse seems overdone and WS needs to realize it’s a wrong thesis
When it comes to saas wall street is all about Katy Perry...
You're hot then you're cold you're yes then you're no you're in then you're out ...
YOURE UP AND YOU'RE DOWN
You're wrong
Spot on analysis honestly.
SAAS isn't going anywhere.
It doesn't make sense to develop snowflake systems in house that every new employee would need to train on, then expect an in house staff to maintain said snowflake, when that snowflake isn't related to your core business in the first place. Companies only do that if it increases their moat, or if a suitable third party option doesn't already exist.
Wait, are you selling buy or sell Snowflake (SNOW)?
Yeah, move back into Healthcare and pump my NVO bags
You don't save money, that's my point.
Most SAAS companies charge a fraction of what it would cost to develop an equivalent service, even with AI. The SAAS companies can/do use AI too. So there's no speed benefit. Plus, the SAAS companies can distribute the cost of development amongst their clients, whereasa your buisiness has to eat it entirely.
It's not like LLMs were only made available to a few people. Everyone has access. The rising tide raised all ships.
We can see this in Big Tech. Facebook for example originally only had Facebook. Some private internal groups sure but the same old Facebook. Then they built Workplace and moved internal groups over to Workspace. Then they moved to Google and fired the Workspace team.
They built a tool. They decided it wasn't worth it to maintain a tool that's fundamentally similar to their core app.
So of even Meta doesn't see value in AI internal tools who thinks SAAS is dead?
No it’s done forever for the rest of time.
Semis build semiconductors for what? Weeping my ass? Eventually software will run upon it. The next rally will be a SAAS rally. You can’t replicate their services with LLM. Think about it …
MSFT remains heavily undervalued, it’s reaching a point of irrationality
Most of that shits probably going right back into chips, ive heard so many times that theres a sector rotation out if ai the past few years, never happens.
Saas will mount a comeback regardless though and consumables will continue to not do much as always.
Saas was inverse chips but it failed to rally on Friday when chip stocks fell 10%
They did hold up better than the overall market
So a few years ago, big hype crypto, then big hype drone everything, then big hype VR everywhere, then big hype AI... Do you see any kind of pattern here? Got this from Sven Carlin on you tube. Now they trying to get us to buy into a company that is possibly going to mine asteroids and do manufacturing in space. But this time it is different.