What did reporting season teach us about software and AI?

By John Middleton

Nvidia, DeepSeek, ChatGPT and Anthropic (Claude) have dominated headlines over the last year, creating heightened volatility in equity markets. This has raised pointed questions about how artificial intelligence is set to affect the world of IT software.

Two holdings in the fund, Xero and WiseTech, sit squarely in the crosshairs of this debate, and we believe the February results season supports our conviction in both.

Markets don’t like uncertainty, and volatility is at an extreme

It is very difficult to address concerns about AI that are not yet affecting current earnings, and the February reporting season once again drove more beats than misses. The potential impact manifests outside the current forecasting horizon, in the terminal stage of valuation analysis. It is equally hard to refute a risk that cannot be seen or quantified with any confidence.