FEAR & GREED | Business News Q+A: The SaaSpocalypse? Only if you pick the wrong companies
Mar 23, 2026
Damon Callaghan, partner at ECP Asset Management and software investing pro, digs into the 2026 sell-off in software stocks. He explains why the market overreacted to AI coding tools. He highlights how durable advantages like proprietary enterprise data, reputation and regulatory scale protect some firms while simple, lookalike apps are vulnerable.
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Software Is A Delivery Mechanism Not A Moat
- Software alone doesn't make a company defensible; competitive advantage matters more than code.
- Damon Callaghan says software is a delivery mechanism and investors must assess what unique assets prevent competition.
Selectivity Is Essential When Buying Software Stocks
- Be selective and focus on software companies with strong defensible assets when investing.
- Damon advises finding firms with clear competitive advantages rather than buying software stocks indiscriminately.
Proprietary Enterprise Data Resists AI Replication
- Enterprise-grade proprietary data creates barriers that AI coding can't replicate.
- Damon notes decades of customer-contributed data and industry-specific workflows produce unique risk models and edge-case handling.