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Thursday, September 3, 2026

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@negligible_cap

Negligible Capital on X

The rising tide is lifting all AI threatened boats… but should it? Some weekend thoughts as the saaspocalypse seems to be winding down -- TLDR: Long software, short consulting / IT services is interesting: Consulting and IT service names like ACN, CTSH, INFY, GLOB, etc. have rebounded sharply alongside enterprise software names (eg. CRM, NOW, WDAY, TEAM blah blah blah) recently. These moves have been driven pretty much entirely by factor rotation - the rebound in consulting names comes from software’s new AI tailwind rather than being earned by their own fundamentals $ACN, for example, is up 50% in the last two months since the June lows, despite posting their 2nd consecutive guidance cut last quarter -- $CTSH up 67%, $GLOB up 40%, $INFY and $TCS both up around 20%. Despite the rebound, most of their results were very “meh” – several misses in growth / guidance expectations (largely attributed to conflict in the middle east, which probably has some merit), leading to some violent selloffs (Eg. Accenture dropped 18% on June 18 after earnings) Meanwhile, software as we all know is seeing genuine acceleration in some cases, especially in their AI-related revenue metrics, and the narrative is quickly evolving to one in which software is likely to benefit from AI (largely due to strong moats) The same can’t be said for IT services names. Unlike software, where AI is seemingly becoming more additive for their platforms, AI is likely to be structurally deflationary for labor-based IT service models. The current pricing model faces disruption as enterprises seek greater efficiency in delivery and shift towards more outcome-based work. Customers are likely to demand service providers pass on AI productivity gains via lower pricing, especially for contract renewals. Also clients are delaying IT spend due to concerns over rapid AI investments / prioritization of spending elsewhere (eg. IBM’s pre-release, which saw consulting revs miss expectations, among other issues). The growth uncertainty alone likely puts a ceiling on multiples Anyways I know I’m making some very broad generalizations and am probably wrong and this isn’t financial advice but I’ll close it out reminding everyone that Accenture has 800k employees

Investor Letters

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Microsoft ($MSFT) - Deep Dive

Microsoft’s AI data-center buildout lifted annual CapEx from $5.5 billion in FY2014 to $115.9 billion in FY2026, resetting free-cash-flow…

MSFT $3.8T
Bearhold Research 18 clicks

QXO Inc.

QXO is building a North American construction-products distributor through Beacon, Kodiak and TopBuild, targeting $18.1 billion of combined…

QXO $13B
SixSigmaCapital: Navigating the Financial Markets 1 click

UK Primer: The Equity Revival

UK equities trade at decades-wide discounts to developed-market peers as improving sentiment, capital reform and foreign M&A support a…

ARM $269B
Aurelion Research 1 click

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