"While much of the AI excitement has centered on data centers, chips, and GPUs, Ives said software will be the 'heart and lungs of the AI revolution.' The infrastructure buildout is still in its early innings and could stretch over the next decade. But software is where the real use cases and monetization will emerge, he added. Ives said it is wrong to assume that big software companies like Salesforce and ServiceNow are 'structurally broken' or set to be replaced by AI-native tools."
"These companies are deeply embedded in enterprise stacks, with hundreds of thousands of customers, Ives said, adding that their AI use cases could unlock incremental revenue over the next six to 18 months that investors are not yet pricing in. Large, entrenched platforms should not be compared to smaller players that serve small and medium-sized businesses. 'You cannot paint all of them with the same brush,' Ives said."
Recent investor pessimism toward software companies appears disconnected from software's central role in the AI revolution. Software functions as the core enabler of AI use cases and future monetization, even as data centers, chips, and GPUs receive heavy attention. The infrastructure buildout is in early innings and could span the next decade. Large enterprise software firms remain deeply embedded in corporate stacks with extensive customer bases and are not structurally broken. AI integrations could unlock incremental revenue over the next six to 18 months that investors may be underestimating. Microsoft's software and cloud ecosystem is essential to the broader AI rollout despite near-term concerns.
Read at Business Insider
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