The Compound and Friends

Software Stocks Melt Down, Palantir Beats, Energy up 12%

138 snips
Feb 3, 2026
Market leadership is shifting from mega-cap tech to small caps, energy and staples. The software sector faces a violent re-rating as AI disruption and legal tools shake incumbents. Palantir posts standout accelerating growth amid the turmoil. Housing and rents show easing, while energy names surge and practical trade ideas are discussed.
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INSIGHT

Software Sector Financial Shock

  • Software firms are facing rapid downward guidance and multiple compression as AI threatens business models.
  • Investors are pricing worst-case churn and pricing erosion before revenue declines show up.
ANECDOTE

Timing A Bad Call On AI Winners

  • Michael admits his prior call that some software winners would benefit from AI was poorly timed.
  • He hopes it was his worst take, acknowledging the brutal re-rating in software.
INSIGHT

AI Tools Trigger Sector Repricing

  • New AI legal tools accelerated selling in legal/data/software stocks as investors price intensified competition.
  • Anthropic's legal product prompted broad concern across software and private equity exposures.
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