Consider avoiding or selling shares of Monday.com (MNDY) due to its weak guidance and high risk of disruption from new AI technologies. This reflects a broader "SaaSpocalypse" theme, where investors should be highly selective with Software-as-a-Service (SaaS) stocks, favoring those with deep AI integration. A major investment opportunity lies in the "picks and shovels" of the AI boom, specifically companies building the required power and data center infrastructure. Look for opportunities in electric utilities, data center REITs, and grid modernization companies that will benefit from this build-out. Finally, keep the private company Databricks on your watchlist as a highly anticipated future IPO, given its strong AI-driven growth.

Monday.com (MNDY)

• The company's stock fell by 21% on Monday after issuing weak guidance as part of its full-year earnings report.
• Revenue guidance for the current quarter ($338 million - $340 million) fell short of analyst expectations of $343 million.
• The company's 2026 revenue forecast was cut by a third since their investor day last summer, and they withdrew their 2027 guidance entirely.
• The stock is down more than 45% this year.
• The podcast host describes Monday.com as a "poster boy for a company that's set up for AI disruption," suggesting its business model is highly vulnerable.
• An anecdote was shared where a CNBC reporter was able to create a functional duplicate of the platform using an AI tool (Claude Cowork) in under an hour, highlighting the potential for AI to replicate its services.

Takeaways

• Bearish Sentiment: The discussion around Monday.com is overwhelmingly negative, focusing on its poor stock performance, weak forward guidance, and fundamental vulnerability to AI disruption.
• High Risk: The company is presented as a prime example of a Software-as-a-Service (SaaS) company whose core product could be made obsolete or easily replicated by new AI agentic technologies.
• Investor Caution: Investors should be extremely cautious. The significant cut in long-term revenue forecasts and withdrawal of 2027 guidance signal deep uncertainty about the company's future in an AI-driven world.

Databricks (Private Company)

• Databricks is presented as a counter-example to the struggling SaaS narrative, demonstrating strong growth by embracing an "AI-first" model.
• The company's revenue run rate is up to $5.4 billion, representing a 65% year-over-year growth.
• 25% of its Annual Recurring Revenue (ARR) is attributed directly to its AI products.
• Databricks recently raised $7 billion in fresh capital through a mix of debt and equity.
• The CEO's strategy is to build an "agentic stack" on top of their core database product, betting that agent-based user experiences will replace traditional software front-ends.
• A key statistic highlighted is that 80% of databases on the Databricks platform are now being built by AI agents, not humans.
• Regarding a potential IPO, the CEO was quoted as saying, "it's not a great time to go public," suggesting an IPO is not imminent.

Takeaways

• Bullish Sentiment: Databricks is positioned as a winner in the new AI paradigm. Its financial metrics and strategic direction are highlighted as a model for success.
• Future IPO to Watch: While it is currently a private company and an IPO is not on the immediate horizon, its strong performance makes it a highly anticipated future public offering. Investors interested in the AI and data space should keep it on their radar.
• A Benchmark for SaaS: Investors can use Databricks' strategy as a benchmark to evaluate other public SaaS companies. The key question is whether other companies are successfully transitioning to an "AI-first" model and driving new revenue from it, or if they are at risk of disruption.

Investment Theme: The "SaaSpocalypse"

• The podcast discusses a major market theme where Software-as-a-Service (SaaS) companies are seeing their stock values fall dramatically, a phenomenon dubbed the "SaaSpocalypse."
• The core idea is that the market is re-evaluating SaaS companies based on their vulnerability and response to the rise of powerful AI agents.
• The market is punishing companies that are not showing how they can compete long-term in an AI-native world, even if their current growth is acceptable.
• There is a clear divergence between:
  • Legacy SaaS: Companies with traditional, "clunky" user interfaces that could be easily disrupted or replicated by AI (e.g., Monday.com).
  • AI-First SaaS: Companies that are fundamentally integrating AI and "agentic" workflows into their products, leading to increased usage and new revenue streams (e.g., Databricks).

Takeaways

• Be Selective with SaaS Investments: The key insight is not to abandon the SaaS sector entirely, but to be highly selective. The era of all SaaS stocks rising together is over.
• Analyze AI Integration: When evaluating a SaaS company, look beyond surface-level AI features. Investigate whether AI is a core part of their product that drives revenue and user engagement, or if it's just a bolt-on feature.
• Focus on Agentic Potential: The future of software may be "agentic," where users interact with AI agents rather than complex menus and dashboards. Companies that are leading this transition are likely to be the long-term winners.

Investment Theme: AI Infrastructure (Data Centers & Power)

• The White House is reportedly pushing major AI firms to sign a pact regarding data center development.
• The pact would require tech giants to bear the full cost of infrastructure upgrades and new power generation needed to support their massive data centers.
• This is intended to prevent the AI build-out from raising household electricity prices, straining water supplies, or harming grid reliability.

Takeaways

• "Picks and Shovels" Play: This highlights a significant "picks and shovels" investment opportunity in the AI boom. While betting on the winning AI model is difficult, the demand for power and physical infrastructure is a certainty.
• Identify Beneficiaries: This policy points to a massive transfer of cost (and therefore revenue opportunity) to the companies that build and supply the necessary infrastructure. Investors should research companies in sectors such as:
  • Electric utilities and power generation.
  • Data center operators and Real Estate Investment Trusts (REITs).
  • Companies involved in grid modernization and electrical components.
• A Hidden Cost for AI Giants: For investors in the major tech companies building AI, this represents a significant and growing cost center that could impact margins.