AI's ability to generate software at near-zero marginal cost is erasing the scarcity premium that propelled software stocks for over a decade. This realization is causing a massive capital rotation out of software ETFs and into tangible, scarce assets like metals and commodities.

Investors' obsession with companies growing "from zero to 100 in a year" has led them to neglect fundamentally strong enterprise software businesses. This creates an arbitrage opportunity for those willing to back solid companies with great, albeit not exponential, growth in large markets.

Long-term returns are a function of capital supply and demand. Hyped areas like AI have a surplus of capital, competing returns down. True opportunities lie in being the "one banker for 1,000 borrowers"—investing in areas starved for capital, where your money commands a higher expected return.

Fears of AI disruption have caused an overreaction in the market, depressing the stock prices of stable SaaS companies like HubSpot. Trading at just 3x forward revenue despite strong fundamentals, these firms represent a value opportunity driven by uncertainty, not just fundamental risk.

The focus on AI among institutional investors is so absolute that promising non-AI companies risk "dying of neglect" and being unable to secure follow-on funding. This creates a potential opportunity gap for angel investors to fund valuable businesses in overlooked sectors.

Figma's CEO argues that as capital and talent flock to AI, significant opportunities are being ignored in less-hyped industries. He cites his investments in fintech for farmers and cryogenics as examples of valuable, missionary-led companies thriving outside the crowded AI spotlight.

Instead of betting on unknowable AI winners, a better strategy is to find quality companies the market has written off as "losers" due to AI fears. Similar to the unloved "old economy" stocks during the dot-com bubble, these perceived victims could offer significant upside if the disruption threat is overblown.

The real SaaSpocalypse may ignite when AI labs like OpenAI or Anthropic go public. This will provide a clear alternative for investors to rotate capital directly out of legacy software stocks—which are threatened by AI—and into the very companies causing the disruption, creating a massive liquidity drain.

When a few high-flying stocks like the 'Mag-7' dominate the market, capital is pulled from other sectors, creating cyclical valuation discounts. Stable industries like healthcare can become as cheap relative to the S&P 500 as they were during the 2000 tech bubble, presenting a contrarian investment opportunity.