The statement could turn out to be correct, as a lot of software companies are disrupted by the application of AI (CHGG and ADBE were questionable about their long-term prospects). That being said, that view is pretty much the consensus now as the “picks and shovels” names of AI have mostly gone up meaningfully, and the upside potential may not be as attractive as it used to be. Software has been beaten down especially after the weak earningsof CRM. However, over the long term some SaaS businesses could be the beneficiary of AI as it provides a better experience to customers, making it stickier to switch. CSU has been a niche player in the software industry as the company acquires vertical market software businesses that are really under the radar than other Saas businesses, and the growth playbook is also different. We don’t think the current AI theme would put CSU’s portfolio of businesses at risk but largely improve the offerings to its customers.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in ADBE.