Gavin Baker @GavinSBaker Husband, Becky Painter. CIO, Atreides Management. Former PM, Fidelity OTC fund. investorfieldguide.com/baker/ No investment advice, views all my own. Dec. 15, 2019 1 min read

1) Super important, thought provoking thread.

Structurally lower enterprise software margins as the world moves to AI is something I’d never considered. But the more I think, the more convinced I am that this is a real possibility.

2) AI is dramatically more compute/storage/network intensive than traditional software. And unclear if these higher costs can be passed on, especially during a transition phase where AI driven software competes with traditional software.

3) Flip side is that AI driven software should have even more significant increasing returns to scale than traditional software given importance of data to AI quality, so market structure and relative market share will likely be more important drivers of SW margins going forward.

4) Search may be the first manifestation of this dynamic.

Fascinated to see how it all plays out.


You can follow @GavinSBaker.



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