Q: Hi guys
Was thinking of consolidating two loosing stocks into one position looking out at a recovery a year or so away. Also looking at how much of a AI moat each stock has. Would you sell VHI and add to ENGH or selling ENGH and add to VHI. Or is there another software stock that you would rather go with and sell both?
Much thanks
Stuart
Was thinking of consolidating two loosing stocks into one position looking out at a recovery a year or so away. Also looking at how much of a AI moat each stock has. Would you sell VHI and add to ENGH or selling ENGH and add to VHI. Or is there another software stock that you would rather go with and sell both?
Much thanks
Stuart
5i Research Answer:
Software stocks as a group are in a tough spot, as the uncertainty is high regarding whether their business models will remain durable over time or whether AI will become a cheap alternative, making it harder for these companies to retain customers, let alone raise prices. The risk of technological disruption in the software industry today is real, and almost no one can predict what the outcome will be. Only time will tell, and investors need to be very selective on the types of software names to own—ideally those where even if there is a free alternative, customers still do not switch for some reason.
For consolidating into just one position between the two, we may side with VHI with better overall growth prospects.