In a recent report titled AI Is Not Eating Software, Jefferies analyst Brent Thill challenges the prevailing notion that artificial intelligence (AI) is rendering traditional software companies obsolete. Instead, Thill posits that AI is a transformative force that.
When leveraged strategically, can enhance the value and capabilities of established software firms. This perspective offers a refreshing counterpoint to the prevailing narrative and provides a nuanced understanding of AI’s role in the software industry.
Thill emphasizes that AI should be viewed as a transformational wave rather than a destructive hurricane. This analogy underscores the idea that AI’s impact is not about displacing existing technologies but about augmenting and enhancing them.
For instance, companies like Microsoft are integrating AI into their existing platforms, creating synergies that benefit both the technology and its users.
Microsoft AI Integration
Microsoft serves as a prime example of a company successfully navigating the AI landscape. The tech giant has been at the forefront of AI integration, embedding AI capabilities into its suite of products, including Azure, Office 365, and Dynamics 365.
This strategic approach not only enhances the functionality of these tools but also positions Microsoft as a leader in the AI driven software market. As of August 18, 2025, Microsoft’s stock is trading at $520.17, reflecting investor confidence in the company’s AI strategy.
The company’s market capitalization stands at approximately $2.79 trillion, with a price to earnings (P/E) ratio of 28.88 and earnings per share (EPS) of 12.93. These metrics indicate strong financial health and investor optimism regarding Microsoft’s future prospects in the AI domain.
Embracing AI to Enhance Creativity
Adobe, renowned for its creative software suite, is another example of a company that is embracing AI to enhance its offerings. The introduction of Adobe Firefly, an AI powered tool, allows users to generate and manipulate images using natural language prompts.
This innovation not only streamlines the creative process but also opens new avenues for artistic expression. In its most recent earnings report, Adobe reported a revenue of $21.51 billion for the fiscal year 2024, marking a 10.8% increase from the previous year.
The company’s net income for the same period was $5.56 billion, reflecting a 2.43% increase. These figures underscore Adobe’s successful integration of AI into its business model and its ability to drive growth through innovation.
The Perils of Overlooking AI
While many software companies are successfully integrating AI, those that fail to adapt may find themselves at a disadvantage. Companies like Monday.com have experienced significant stock price declines, attributed in part to their perceived lack of AI integration.
This trend highlights the importance of embracing AI to remain competitive in the evolving software landscape. Industry experts agree with Thill’s assessment that AI is not a threat but an opportunity.
For example, Satya Nadella, CEO of Microsoft, has consistently emphasized the company’s commitment to AI, stating that AI is the defining technology of our time. This forward thinking approach has enabled Microsoft to lead in AI innovation and capitalize on its potential.
Professionals in the software industry are also witnessing the transformative effects of AI firsthand. Developers and designers report that AI tools have significantly improved productivity and creativity.
For instance, AI powered code completion tools have reduced development time, while AI driven design platforms have streamlined the creative process. These personal experiences underscore the practical benefits of AI integration in software development.
The Future of AI in Software
Looking ahead, the integration of AI into software development is expected to deepen. Companies that strategically incorporate AI into their products and services will likely experience enhanced efficiency, innovation, and customer satisfaction.
Conversely, those that neglect AI may struggle to keep pace with competitors, leading to potential obsolescence. In conclusion, AI is not a force that is eating software companies but rather a tool that can enhance and transform them.
Companies like Microsoft and Adobe exemplify how strategic AI integration can lead to innovation and growth. By embracing AI, software companies can position themselves for success in an increasingly AI driven world.