WHY THE SOFTWARE TRADE IS CRACKING

The software sector is having an identity crisis.

WHY THE SOFTWARE TRADE IS CRACKING

Good afternoon,

The software sector is having an identity crisis. Novo Nordisk is losing ground to Lilly, and the AI disruption narrative is finally hitting stock prices where it hurts. Investors are starting to ask the hard questions about moat durability in a world where code is cheap.

Meanwhile, Princeton’s endowment is slashing its growth expectations by $11 billion over the next decade. That is a massive signal from smart money. SpaceX is looking for a shortcut into major indices, and Google is doubling its AI spend.

Getting started.

The Pulse

As of 2/5/2026 market close.
As of 2/5/2026 market close.

Markets

  • US stocks continued their slide yesterday. The fear here is simple: AI is disrupting the traditional software model.
    • S&P 500 Software is down 14% this year.
  • Across the pond, the UK's FTSE 100 hit an all-time high.
  • European corporate bond spreads are tighter than they have been since 2007.
  • Bitcoin touched a 15-month low.

Earnings

  • Uber had a strong quarter for food delivery. However, they issued soft profit guidance as they spend heavily to acquire new users. They remain bullish on self-driving tech. (CNBC)
  • This week's lineup:
    • Today: Amazon, Shell, Reddit, Roblox
    • Friday: Toyota
  • See the full calendar here.

Prediction Markets

  • Silence on the battlefield is fragile. (Polymarket)

Headline Hunt

  • Artificial intelligence is suddenly threatening the entire software growth thesis. (WSJ)
  • A software short seller made $24 billion during Tuesday's selloff. (BBG)
  • Distressed loans in the software sector swelled by $18 billion in just weeks. (BBG)
  • Jensen Huang dismissed fears that AI will replace software tools. (RT)
  • The AI boom in Taiwan is creating a new wave of millionaires. (BBG)
  • China's stock rally drew in 5 million new retail accounts in January. (BBG)
  • Australia is considering a price floor for minerals to attract overseas funds. (BBG)
  • SpaceX is looking for early entry into major stock indexes. (WSJ)
  • Anthropic is targeting OpenAI with a new Super Bowl ad. (WSJ)
  • Russian oil revenues have plunged to a five-year low. (BBG)

The Deal Room

M&A / Investments

  • Zurich Insurance Group is acquiring UK insurer Beazley. The sweetened deal is valued at $11 billion.
  • Texas Instruments agreed to buy Silicon Labs for $7.5 billion in cash. That is a 70% premium.
  • Heidelberg Materials is buying the construction materials division of Maas Group for $1.2 billion.
  • D.E. Shaw is pushing for big changes at CoStar Group. The $22 billion firm is facing pressure to sell Homes.com. Third Point is also planning a proxy fight.

Venture Flow

  • Cerebras Systems raised a massive $1 billion Series H led by Tiger Global. Their valuation tripled to $23 billion.
  • ElevenLabs secured $500 million for its Series D. Sequoia led the round at an $11 billion valuation.
  • Positron, an AI chip startup, raised a $230 million Series B at a $1 billion valuation. Backers include Arena Private Wealth and QIA.
  • Lunar Energy raised two rounds: a $130 million Series C and a $102 million Series D. Activate Capital and B Capital led respectively.
  • Tether slashed its funding plans to roughly $5 billion. Investors pushed back on its $500 billion valuation target.

IPO / Direct Listings / Issuances / Block Trades

  • SpaceX is pitching banks for its $50 billion IPO.
  • Clear Street wants to raise $1.05 billion in its IPO. The fintech firm is eyeing a $12 billion valuation.
  • Veradermics raised $256 million in its IPO. The biotech firm is valued at $1.3 billion.
  • WB Electronics is prepping for an IPO in Poland.
  • Carlsberg is considering an IPO for its India unit.

The Debt Desk

  • The EU agreed to a $106 billion loan for Ukraine.
  • Banks are trying to unload $56 billion in loans tied to Oracle data centers.
  • Black Pearl Compute saw $13 billion in orders for its junk bond sale. The crypto mining unit raised $2 billion.
  • ADNOC is looking to raise $2 billion in its first yuan-denominated bond sale.
  • Conga lenders are stuck with $1.2 billion in hung debt. Deutsche Bank leads the group.

Fresh Capital

  • Echion Capital is spinning out of Millennium with $1.5 billion. Chaitanya Mehra will lead the new firm.
  • Otro Capital raised $1.2 billion for its first fund. They focus on sports private equity.

Crypto

  • The crypto rout has wiped out $500 billion in one week.
  • Strategy is sitting on over $2.1 billion in unrealized Bitcoin losses.
  • Meta has become a key AI‑themed play: one widely cited analysis calls it a “once‑in‑a‑decade opportunity” at about 23x forward earnings, arguing the social‑media giant can become a dominant AI platform if its ad‑AI and capex rollout stays on track. Read the full article here.

Today’s Meme Pick

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