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Report: AI Impact on Software - Will AI Eat Software?

  • 1.  Report: AI Impact on Software - Will AI Eat Software?

    Posted 29 days ago

    New GS Top of Mind Report focused on AI disruption of Software companies fully downlodable here.

    I'd added below key takeaways as well as a comprehensive table with Software players sorted by disruption risk.

    Gist:

    AI is likely to expand the software industry rather than shrink it, but it will increase competition and compress margins in some areas.

    Key Structural Shifts

    1. Software creation cost is collapsing

    • AI coding agents drastically reduce development time.

    • Smaller teams can build sophisticated products.

    2. Barriers to entry are falling

    • Startups can launch competitive products faster.

    • Some SaaS niches could face pricing pressure and commoditization.

    3. Software demand may actually increase

    • Lower development cost → more software built.

    • AI expands automation across industries.

    4. Incumbents still have strong moats
    Key advantages:

    • Enterprise customer relationships

    • Proprietary data

    • Distribution channels

    • Integrated ecosystems

    These advantages buy incumbents time to adapt.

    5. AI shifts value up the stack
    Value may move toward:

    • AI platforms

    • data infrastructure

    • workflow systems

    • AI orchestration layers

    Commodity apps may lose pricing power.

    US Software Industry Players by Disruption Risk

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    Carlos Salas
    Portfolio Manager & Freelance Investment Research Consultant
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