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  5. CSU: I am concerned that AI will disrupt traditional software companies including the companies within the CSU family. [Constellation Software Inc.]
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Q: I am concerned that AI will disrupt traditional software companies including the companies within the CSU family. What are some early signals that would indicate AI is disrupting CSU's traditional businesses and growth prospects?

Thanks.
Asked by Joel on September 30, 2024
5i Research Answer:

We think AI will end up being a net benefit for companies like CSU. As software companies increase AI capabilities into their offerings it will improve their customer experience and increase switching costs. We have primarily seen the picks and shovels names benefitting from AI, while from a consumer/business perspective the roll out of end products has been slower. We think AI will lead to better SaaS solutions that will increase consumer and business efficiency and also present more acqusition opportunities for CSU. On the other hand, companies like ADBE and CHGG were concerned with how AI would disrupt their long-term performance. If AI leads to legacy systems becoming obsolete this could be a threat. Overall we view the impact of AI on CSU positively with few early signals that it will disrupt CSU's business/growth.