"Until very recently, the narrative around AI was that the $600 billion of annual corporate capital expenditure ("capex") fuelling it was good for stocks in the short term. The companies receiving that money as new revenue (AI model makers, data center constructors, and the energy companies supplying them) would be the immediate beneficiaries. The efficiencies delivered by AI would be good for tech and non-tech companies alike. The Big Tech hyperscalers have always argued that the demand from their revenue-paying clients far exceeded their ability to supply AI services. That narrative was turned on its head in the last 24 hours as it dawned on traders that AI also has the ability to reduce the revenues of a vast range of adjacent tech companies."
"The argument-advanced by Palantir CEO Alex Karp and CTO Shyam Sankar on their recent earnings call -is that AI is now so good at writing or managing enterprise software that it threatens to make irrelevant a range of tech companies that have, for years, enjoyed recurring revenues by providing enterprise apps to companies on a software-as-a-service (SaaS) basis. That led to a widespread sell-off of tech stocks, wiping away $300 billion in market cap in a single session. S&P 500 futures were flat this morning after closing down 0.84% last night. SaaS companies took major hits: Microsoft closed down 2.87%, SAP was down 3.29% this morning on the German market, Salesforce lost 6.85% yesterday and was further down in overnight trading, ServiceNow was down 6.97% yesterday and was marginally lower overnight, also. Palantir's Sankar said on the call that his company's "AI Forward Deployed Engineer" product-which allows clients to manage software and code bases through natural language commands-is able to reduce the time it takes to complete "complex SAP ERP migrations" from "years of work" to "as little as 2 weeks." (ERP stands for "enterprise resource planning," and it"
Massive corporate capex of about $600 billion has driven demand for AI model makers, data center builders, and energy suppliers, initially boosting stocks. Hyperscalers argued that client demand outstripped supply of AI services. Traders realized that AI can also displace adjacent tech revenues by automating enterprise software development and management. Palantir executives claimed AI tools can shorten complex SAP ERP migrations from years to as little as two weeks via natural-language management products. That realization sparked a broad tech sell-off, erasing roughly $300 billion in market capitalization and hitting major SaaS stocks hard.
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