AI Shifts Investment Landscape: Most Profitable Stocks Change Drastically

Crypto KOL Bitwu.ETH highlights the phenomenon sweeping the capital markets: the US software sector is entering its most challenging phase in modern history, just as Nasdaq approaches its all-time high. This fundamental shift is driven by the launch of Claude Cowork AI, which has demonstrated revolutionary capabilities and deepened the performance gap between traditional software companies and leading technology players.

The Decade of Traditional SaaS Glory Ends

Over the past ten years, the US software industry has enjoyed three main propulsive forces. First, low interest rates resulted in minimal discount rates and maximized future cash flow projections. Second, the SaaS model offers the highest profit margins with continuous renewal cycles, creating an attractive long-term growth narrative for investors. Third, massive cloud transformation has given tech companies premium growth valuations.

As a result, SaaS companies have grown rapidly, with attractive annual recurring revenue (ARR) valuations reaching 15 to 30 times, even before achieving profitability. This has created a golden era for the most profitable stocks in the software category.

Claude AI and Software Margin Pressure

The emergence of Claude AI has fundamentally changed the game. This technology reduces the marginal costs of various software functions to nearly zero, something previously considered impossible. This margin compression triggers a comprehensive reevaluation of traditional software business models, which have relied heavily on high pricing power.

Capital Shifts to AI Infrastructure

This economic shift has prompted a measured migration of capital from the SaaS application layer toward AI infrastructure, computing power, semiconductor chips, and fundamental platform models. Investors systematically redirect their capital from the application layer to the backbone of the AI economy.

Most Profitable Stocks in the AI Era

Given the constantly evolving market dynamics, the justification for maintaining a software stock portfolio becomes increasingly difficult to build, regardless of how cheap the valuations are. The investment landscape has shifted dramatically—most profitable stocks are no longer in the traditional software sector but in infrastructure supporting AI advancement. A new era has begun, and investment choices must adapt to the ever-changing market realities.