AI is giving it “play” rather than killing software.
“AI is going to deal with software and will be a multiplier of the power of software,” Goldman Sachs analyst Kash Langan told Yahoo Finance at the company's annual joint + technology conference on Monday.
He compared today's AI moment to the rise of web browsers in the 1990s. Instead, it became a front-end that expanded the industry. Today, Langan believes that the use of the software will be streamlined even further.
This will allow SaaS companies like Salesforce (CRM) to shop on a per-rungan basis. “I'm a big fan,” he said. If a company can significantly grow its AI AgentForce customer base, it would be around 8,000 to 14,000, but it would be easier to overhang stock-weighted valuations.
Langan said he is betting widely on other application software layer companies.
“We have companies like Intuit (Intu), Salesforce, Adobe (Adbe), and more,” he said. “They don't have a perfect story, but they have a good story,” he added that ServiceNow (now) also stands out as it is between application software companies and platform companies.
Some sectors struggle, which creates bullishness. Langan pointed out that many of his stock picks are not bubbles, but rather depression. Application software companies in particular have been undermined in their ratings, while infrastructure players like Snowflake (Snow) and Mongodb (MDB) are better maintained. But that pressure can create opportunities for long-term investors.
Langan also flagged a more speculative name in his reporting: CoreWeave (CRWV).
“This is a hierarchical bet on the subject of AI infrastructure,” he explained. “They are the only pure AI and the only hyperschool in the public market.” With a large amount of debt on the balance sheet, CoreWeave will benefit from a decline as they refinance, Rangan said. He added that the advantage is that it allows for quick deployment of GPU clusters that help businesses get to market faster.
However, it depends on CoreWeave being able to maintain its advantages up to the market. Langan drew it in parallel with the early days of Amazon Web Services (AMZN), but warned that execution was important.
As for the AI bubble story, Langan said it is a more of a problem in the private market than a public software name.
“Bubble, you can argue, more absolutely related to private markets, VC funds, [and] The private company's assessment said heavily funded players like Openai (Opai.pvt) and Humanity (anth.pvt) are still deep in the investment phase with an uncertain economic model.
