Q: In your opinion, the Stella AI announcement of today seems to demonstrates that Constellation can leverage AI as a growth driver rather than a threat. Given that the stock is currently under pressure due to misguided fears about software obsolescence, don't you think this is proof that CSU will dominate through its proprietary data? On a 3 to 5 years horizon, isn't this precisely the 'decisive moment' to accumulate a market leader at a discount?
5i Research Answer:
We are not sure it is 'proof' but certainly evidence that CSU and its subsidiaries are not going to just sit around and wait for AI-competition to attack their market. It was a solid announcement, certainly, but may take a while to have any material impact. It highlights the importance of customer knowledge and data, and this is what we think the 'AI fear trade' is missing. Customers will not simply roll over everything and their data to an AI competitor. CSU etc. knows their customer needs and data, and this can be an advantage. We would like to see more of these announcements before calling a pivot, but it is a good sign from the company, and should alleviate some sentiment pressures.