This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Software stocks have more or less stabilized after a period of panic.
Where earlier this month the industry was nearly written off as the latest subjects of AI’s conquest, they’re now being viewed as something like partners.
Investors are changing up how they receive major announcements from AI labs. If updates to Anthropic’s Claude first sparked a sell-off, the subsequent news helped level things out. More than averting a software apocalypse, Wall Street is settling on the idea that many companies will thrive in an AI-dominated environment.
Block’s (XYZ) view that it can now do a lot more with fewer people certainly made its stock go up on Friday.
The irony here is that each iteration of the AI story, intended to downplay the disruption or make the inevitability of AI dominance more palatable, can also have the opposite effect and trigger greater and greater skepticism.
It’s like a Love is Blind contestant sharing their life history with romantic partners, but changing key details every time they recite it. That won’t make people like you more. It will have them thinking you’re a liar.
Will AI and vibe coding replace software engineers or free their minds for more creative work? Will advanced models usurp the roles of white collar labor or orchestrate their more tedious tasks alongside them?
The different versions of these stories reflect the uncertainty of where AI is headed, and how businesses and consumers might adapt to it. But it would be naive to think that the softer interpretations aren’t also a marketing tactic or worse, a Trojan horse. (It’s worth noting that the AI hard sell, of models sparking mass joblessness and degrading society, is also wielded as an AI sales tool.)
In the same way that media companies surrendered their troves of words, perhaps their only asset of real value, in exchange for checks from OpenAI, it’s hard not to see this latest replay of software partnerships as another kind of Faustian bargain.
Others don’t see it that way.
As Deutsche Bank analysts wrote in a note earlier this week, AI labs are positioning themselves atop existing software needs, rather than supplanting the enterprise software world. “It remains very difficult to replicate or displace much of the knowledge, metadata, and workflows incumbent systems have amassed,” they wrote, adding the key insight: “Claude is only as useful as the data it connects to.”