'Hubris Of Panic': Goldman Delta-One Desk Head 'Besieged With Angry Calls' Over Market Reaction To Claude

Rich Privorotsky, Goldman Sachs Delta-One desk-head, dropped a brief note overnight highlighting his experience in the current chaos of the 'AI vs Software' battle...

AI Disruption: 

Another violent session in equities, with a boutique research note seemingly wiping billions off market cap.

A lot has been written about AI and its implications for the economy. The impact on unemployment and growth is above my pay grade. What is clear in equities is that markets are debating terminal values. 

What is impossible to ignore is the meaningful break in US software below prior lows. 

IGV has de-rated sharply. 

In the industry closest to the technology itself, there is acute wariness about how disruptive the latest iterations of agentic AI may be. 

If code can increasingly write itself, barriers to entry in software development collapse and the rent extraction embedded in the SaaS model is structurally challenged.

Hubris of Panic: 

I was besieged with angry calls about market's overreaction (e.g. Software, Financials).

My conclusion is either software is dramatically mispriced or we must accept that an industry-level disruption of this scale will have profound implications across sectors. 

The thematic I have been leaning on for weeks is the “moat check.”

It’s not value vs growth or momentum vs mean reversion.

It’s a fundamental question about terminal durability.

Is the business physical, producing a legitimate end product, or is it extracting rents from friction in human systems? 

AI is about automation and the removal of friction.

The problem with the hypothesis of AI disruption is that it cannot easily be disproved.

Multiples are relative constructs, and once in flux they tend to remain unstable until something resets expectations.  

Capital appears to be shifting from asset light into asset heavy (hyperscalers the exception). 

Risk: 

Asia remains bid as the AI enablers and global manufacturing hubs.

Korea in particular sits in the supply chain and is benefiting from AI capex.

The US looks more exposed as the incumbent information technology base being disrupted.

Europe is arguably more Asia like in industrial composition, but its index constituents derive a significant share of profits from the US.

With NVDA and CRM later in the week there is a good chance we have a bounce in the US trade (numbers can be very good short term) but that doesn't takeaway from the issues on terminal value. 

Said another way I think the US is de-rating and that makes it a source of funds vs EM/Asia. Still like healthcare, aerospace vs financials and tech.

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