Nick Evans, portfolio manager at Polar Capital, warns that application software faces an existential threat from artificial intelligence, according to Bloomberg.
Polar Capital cuts exposure to application software
The $12 billion global technology fund has exited nearly all application software holdings, retaining only a small position and call options in Microsoft. Evans argues that AI coding tools can now replicate and modify much of existing software, increasing competitive pressure.
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“We believe application software faces an existential threat from AI,” Evans said.
The fund sold stakes in SAP, ServiceNow, Adobe and HubSpot. “We will not return to these companies,” he added.
Instead, the fund is overweight semiconductor makers such as Nvidia, as well as infrastructure, networking and data center power providers.
Evans believes current valuations fail to reflect long-term uncertainty and potential cash flow pressure. He advises investors to significantly underweight application software and react quickly as AI disruption accelerates.
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