To The Moon

Today the boss wasn't around, and business seemed pretty slow, so I spent some time analyzing stocks.

It was a rough week for me. I took significant losses on Fluence Energy after repeatedly buying the dip as the stock kept falling. On the bright side, I managed to make some gains from Marvell, Oracle, and ServiceNow, which helped offset part of the damage.

That's the reality of investing—some positions work out, while others become expensive lessons.

wah lau, software stocks ah, last few years they damn the favourite in US stock market.

 Grow so fast, upside so high, if you pick the right company, sure make you very rich one. But last half year, these market darlings kena big crisis sia. After AI Agent suddenly explode, everybody shouting "AI going to replace software!", whole software sector kena bloody wash. IGV software ETF drop almost 40%, many famous stocks kena cut into half. This week some software companies manage to turn around big. 

But now, just recently, situation starting to reverse already. This earnings season, some software companies suddenly boom again. $Snowflake(SNOW)$   report come out, jump 36%, $Datadog(DDOG)$   jump 31%, $Atlassian Corporation PLC(TEAM)$   (Atlassian) also jump 30%. $Twilio(TWLO)$  , $Figma(FIG)$   all up big big. Network security like CrowdStrike and Palo Alto from bottom already rebound almost 100%. But still, many other software stocks kena punish, even good results also no use.

So what is the logic behind this confusing thing?

Muthu tell you straight. Now better don’t chase those infrastructure layer already fly to the sky. Better go hide in the application layer stocks that still cheap and got many good catalysts coming. This one is Muthu’s favourite US stock opportunity for second half of this year.

This earnings, I study many many software companies. Here are the winners:

Common points of the winners:

All are To B, especially big big companies (To Large B).

Not those small small or consumer one. This same like big AI models also shifting from normal people to company side. When big companies use AI, these software boys all get upgrade and more business.

AI must really bring new money, not just play play AI or cut cost only.

Snowflake use their AI tools (Cortex and Intelligence) make revenue grow 34%, more faster than before. Datadog monitor all the GPU and AI workload, business explode. Twilio Voice AI also bring many new customers. Team got Rovo AI assistant, customers using more and more, pay more money. Figma also, even though people scared AI replace designer, but actually more people start doing design work.

If only use AI but revenue still so so (like Shopify), or only profit up but sales flat (like Workday), market still whack them. Market only like those who really make more sales from AI.

Usage-based pricing (pay according to how much you use).

This one very important. Snowflake, Datadog, Twilio already like that. Team and Figma also add new AI part charge by usage.

Why? Because old seat license (pay per person) got two big problems now. AI may make company fire people, then less seats. Also, every time AI use token, software company ownself must pay the cost. Use more = lose more. But usage-based? No problem. AI make work faster, demand actually increase. AI Agent use more, they also earn more.

Muthu deeper thought:

AI replacement fear already mostly priced in liao. These good companies show good numbers, share price fly even though long term AI risk still there. Means market already accept.

Now software overall, Muthu think risk-reward very good. Especially infrastructure layer like Snowflake, Datadog, Twilio — they are like the "gas and electricity" for AI companies. Use more AI = they earn more sure. Network security also very strong because AI powerful also can be dangerous.

Those old big software companies only add fancy AI inside, Muthu not so excited. They always one step slower than the big AI models. Hard to catch up.

Muthu conclusion:

Best ones are:

To big companies business

Already make real new revenue from AI

Got usage-based pricing

Especially the infrastructure ones, they got highest chance to explode first because direct link to AI Agent usage.

AI not only enemy for software, for many companies it is actually friend. But must pick carefully, don’t anyhow buy. Got risk also must know.

This is Muthu prata boy analysis after studying many reports. If you want more deep deep one, come find Muthu lah. While eating prata, we talk stock.

Boss, you want egg or not? 😎

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