PAYC
PAYCOM SOFTWARE, INC.
stock NYSE

Here's a short review of SaaS and AI dumpsters, if you're a masochist "value investor" like me or brave enough: choose your poison if you want to fight AI.
Easy of coding and making software reduces the cost to make software. Incumbents now have to compete by investing in more tech to keep clients reducing margins or race for a better product. Terminal values of % of TAM now has the potential to hit zero. Weakest are point solutions, single use, and horizontal software. Weakest customers are private SMBs. This is because switching cost for a customer has now fallen.
Some interesting names:
"Obvious AI beneficiaries," could be due to higher AI use volume, data center expansion, etc. Most of the bigger cybersecurity names, but because they are obvious, they are still expensive and have recovered quickly. **CRWD, PANW, FTNT, RBRK, NET, ZS, VRNS**. Datacenter expansion: **DDOG**. Interestingly Dynatrace **DT** is the second in the market to DDOG but has not recovered**.** Semiconductor expansion, **SNPS, CDNS**
"Vertical software" that specifically targets industries or types of customers and provide the entire software suite, they are way more resilient than horizontal software because switching cost is not primarily coding, but regulations, customer service, network effects: **CNSWF, TOITF, ROP**. Publicly traded names: **TYL, BSY, VEEV, GWRE, ADSK, DASTY, SSNC, MANH, IOT, DSGX, WK, WAY, TOST, TTAN, PCOR, NICE**. These are slightly riskier than the Constellation type because of single industry exposure.
"Systems of records," companies that have customer's data, so customer switching cost is primarily safety and management of their own data. Horizontal software like **NOW, CRM**, all the HCMs, **ADP, WDAY, PAYC**, etc. ServiceNow can also be thought of as a potential AI beneficiary because it manages how AI and humans work together.
Other interesting names:
**TEAM**. It is very uncertain if AI coding benefits or hurts Atlassian, but based on the most recent quarter, it's a beneficiary so far because the volume of code and bugs leads to higher JIRA seat growth.
Most horizontal software are high risk, but can potentially disrupt incumbents, IF they are nimble enough. Still, high risk. **HUBS** down -20% today. **INTU**'s QuickBooks is horizontal. **ADBE** is thought of as a horizontal software for creatives, but it could be a vertical software for marketers if you consider the ecosystem and "system of records. **GPN, FISV**, payments but also software for financial institutions.
Other AI disrupted names, because like it or not AI is changing industries:
"AI access public data and available to all so data becomes zero value overnight." **FDS, MORN, SPGI, TRI, WTKWY, VRSK, CSGP, IT**. Disruption is specific to industry and company. Legal is more disruptible, health and finance might be. VRSK has very low risk of AI because of proprietary data, same with SPGI, and maybe CSGP.
"Human relationships and disintermediation": Why pay for a human middle man if AI has the answer? Insurance brokers **MRSH, WTW, AJG, BRO**. A business might now ask AI, which is the right insurance plan for me? Insurify came out with a tool and brokers all crashed. AI also reduces friction costs because human labor is worth less and much more productive, this results in companies using the "cost arbitrage" business model being disrupted. Biotech CROs that do the clinical trial labor including statistics and coding: **IQV, ICLR, CRL**, if AI in biotech is used more. IT consulting, including those using foreign labor: **ACN, IT, Indian ITs, EPAM, GLOB**

Here's a short review of SaaS and AI dumpsters, if you're a masochist "value investor" like me or brave enough: choose your poison if you want to fight AI.
Easy of coding and making software reduces the cost to make software. Incumbents now have to compete by investing in more tech to keep clients reducing margins or race for a better product. Terminal values of % of TAM now has the potential to hit zero. Weakest are point solutions, single use, and horizontal software. Weakest customers are private SMBs. This is because switching cost for a customer has now fallen.
Some interesting names:
"Obvious AI beneficiaries," could be due to higher AI use volume, data center expansion, etc. Most of the bigger cybersecurity names, but because they are obvious, they are still expensive and have recovered quickly. **CRWD, PANW, FTNT, RBRK, NET, ZS, VRNS**. Datacenter expansion: **DDOG**. Interestingly Dynatrace **DT** is the second in the market to DDOG but has not recovered**.** Semiconductor expansion, **SNPS, CDNS**
"Vertical software" that specifically targets industries or types of customers and provide the entire software suite, they are way more resilient than horizontal software because switching cost is not primarily coding, but regulations, customer service, network effects: **CNSWF, TOITF, ROP**. Publicly traded names: **TYL, BSY, VEEV, GWRE, ADSK, DASTY, SSNC, MANH, IOT, DSGX, WK, WAY, TOST, TTAN, PCOR, NICE**. These are slightly riskier than the Constellation type because of single industry exposure.
"Systems of records," companies that have customer's data, so customer switching cost is primarily safety and management of their own data. Horizontal software like **NOW, CRM**, all the HCMs, **ADP, WDAY, PAYC**, etc. ServiceNow can also be thought of as a potential AI beneficiary because it manages how AI and humans work together.
Other interesting names:
**TEAM**. It is very uncertain if AI coding benefits or hurts Atlassian, but based on the most recent quarter, it's a beneficiary so far because the volume of code and bugs leads to higher JIRA seat growth.
Most horizontal software are high risk, but can potentially disrupt incumbents, IF they are nimble enough. Still, high risk. **HUBS** down -20% today. **INTU**'s QuickBooks is horizontal. **ADBE** is thought of as a horizontal software for creatives, but it could be a vertical software for marketers if you consider the ecosystem and "system of records. **GPN, FISV**, payments but also software for financial institutions.
Other AI disrupted names, because like it or not AI is changing industries:
"AI access public data and available to all so data becomes zero value overnight." **FDS, MORN, SPGI, TRI, WTKWY, VRSK, CSGP, IT**. Disruption is specific to industry and company. Legal is more disruptible, health and finance might be. VRSK has very low risk of AI because of proprietary data, same with SPGI, and maybe CSGP.
"Human relationships and disintermediation": Why pay for a human middle man if AI has the answer? Insurance brokers **MRSH, WTW, AJG, BRO**. A business might now ask AI, which is the right insurance plan for me? Insurify came out with a tool and brokers all crashed. AI also reduces friction costs because human labor is worth less and much more productive, this results in companies using the "cost arbitrage" business model being disrupted. Biotech CROs that do the clinical trial labor including statistics and coding: **IQV, ICLR, CRL**, if AI in biotech is used more. IT consulting, including those using foreign labor: **ACN, IT, Indian ITs, EPAM, GLOB**