The episode deconstructs the early-year narrative that AI would decimate the software-as-a-service (SaaS) industry. It argues this fear was overblown, citing strong second-quarter earnings from major software companies as definitive evidence of their resilience and adaptability.
A key observation is the massive performance gap between different tech sub-sectors. While semiconductor ETFs like SMH have soared over 58% year-to-date on AI hype, software and cloud ETFs like CLOD have remained flat, only recently recovering from a downturn.
The fear of AI disrupting software is compared to the "death of the mall" narrative from a decade ago, where Amazon was expected to eliminate all brick-and-mortar retail. Just as many retailers adapted and survived, the argument is that large, innovative software companies will successfully navigate the AI transition.
The episode's premise is a quantitative screening method to find "ETFs of the Moment" by analyzing short-term spikes in return and volume. This approach led to identifying the small, under-the-radar CLOD ETF as a vehicle for the software resurrection theme.
Keep pulling the thread on Andre Yap.