Key insights
- The author argues that the AI revolution is shifting market capitalization from SaaS companies to hardware providers. As AI commoditizes software, the value is concentrating in companies that can provide the physical infrastructure and hardware needed to train and run AI models. This trend could benefit companies in the semiconductor, robotics, and cloud computing sectors.
Heyo! Not a professional investor - just enjoy learning about the economy etc.
Here is my breakdown of what i think is happening
For the last decade, B2B SaaS companies (Alot techn giants like Monday/Figma etc) commanded massive valuations. Due to AI turning software into a basic commodity - this organizations are losing capital. Even the whole race to AGI - ain't a code problem - it's a training problem hence a hardware problem All this fancy CMS that required mosly a good business man with good networking skills, A talented coder and having a "Problem" to answer - was all that required to make an The whole hitech bubble inflate - and create this Unicorn and Exit culture around the next Genius Saas. In the past few years the barrier to entry for software has collapsed to near zero(I mean claude code) Sure big infrastructures still have their inprint and also some SaaS's still do have good products(For example Cyber Companies) BUT The value of standard UI/UX applications is pointless.
From having a Website builder - you can create a website in a prompt - and soon you'll be able to create your website builder tool pretty easily - and save money.
So this companies are mostly losing value - they either need to reinvent themselves - or become cheaper.
Either way - Capital will be lost.
But this capital isn't disappearing; it’s just concentrating. The market cap is shifting to the companies that provide what is needed for this era. The real value is now in the hardware is they are what is needed for all of the industry to survive. In Defence, Health, Biotech, Space and Finance - everything will be using AI instead of SaaS. This is not the .Com Bubble as AI is the .Com Hardware is the AWS, The Cloud Storage. No more "We have an app for that" but more of a "We have the capacity to run a Model/Agent for that".
To conclude: Because software is becoming cheap and infinite, premium value is migrating back to things that are hard to build in the physical world: Robotics, Biotech, and Space: Companies tackling real-world physics (like SpaceX integrating with xAI) are the new frontiers - and even Quantom/Energy solutions in the feasible future.
TL;DR
It's not a hype as much as it's a shift Capital is moving from SaaS companies that are a huge part of the world's market cap - Into new-tech which is AI, Hardware, Space and more.
The market is shifting.
Obivously i'm talking about a few years and not short trading but yep.
Remmber XeroX?
(Sorry for typos, tried to use gemini for grammar but didn't want it to sound like an AI wrote it)