Fund Beating 99% of Peers Sees Few Software Firms Surviving AI
Yahoo Finance • • general
Key Points:
- Nick Evans, manager of Polar Capital's $12 billion global technology fund, has sold most software stocks, warning that application software faces an existential threat from AI advancements.
- The software sector has underperformed, with a US software ETF down 22%, while semiconductor stocks have surged due to increased AI-driven computing demand.
- Evans believes AI coding tools are now capable of replicating and modifying existing software, increasing competition as companies develop internal AI solutions and startups emerge.
- His fund holds significant positions in semiconductor companies like Nvidia and is bullish on firms involved in networking gear, fiber optics, and data center infrastructure.
- The AI disruption and market downturn may pressure software firms' cash flow, as equity-based employee compensation loses value and acquisitions
