#92: Hot Takes in AI (Part VIII)
AI labs index inclusion and Salesforce
I’m sticking to my commitment of one Hot Takes in AI edition per month by the skin of my teeth, as this is the last Relentlessly Curious of May. But we’re still making it happen!
Same format as prior Hot Takes in AI editions, but this one is going to be hotter than usual. Let’s get going.
Hot Take #1: SpaceX, OpenAI, and Anthropic IPOs are bad for the public investor.
If you’ve read last week’s Relentlessly Curious, it’s fair to say this take feels a bit redundant. However, I’m going to come at it from a different angle. AI start-ups have seen unprecedented growth, but often at all costs. As these AI labs enter public markets, they will be subject to the same quarterly earnings announcements as everyone else. Higher-than-expected compute costs or slower-than-expected user growth figures are bound to send the market into a tantrum given how much investment has gone into the new frontier from existing Big Tech players. Right now, no one really knows what’s going on under the hood at the AI labs. The numbers they release to the public are at their own discretion, and those figures are chosen deliberately to best position the narrative.
So, when the AI labs are forced to show their comprehensive financial statements every three months, some screws will come loose. In this scenario, more information may actually make things worse. Similar to how the broader market now seems to hinge on NVIDIA earnings announcements, I believe each AI lab earnings call will be a major volatility event for the market.
“Okay, so I won’t buy these IPOs. Thanks for the tip.”
Well, it isn’t that simple, because you’ll probably end up owning these companies whether you like it or not. If you invest in broad-based market-tracking index funds, you’re going to be an owner of each of these companies. SpaceX plans to list their stock on the NASDAQ, which has fast-entry rules that can accelerate inclusion into the Nasdaq-100, within 15 trading days. It’s still to be determined which exchange OpenAI and Anthropic list on, but they’ll likely qualify based on the Fast Entry market capitalization requirement, being in the top 40 of companies. At an $850 billion valuation, OpenAI would immediately rank among the world’s most valuable public companies. Number 16 to be exact as of May 22nd.
As an index investor, why should you be worried? Because of volatility.
Volatility isn’t ideal for the broad-based index investor. The problem is that the index investor is going to own the AI labs soon enough due to index fund tracking rules. The indexes are getting even more concentrated around tech and AI, and once the market knows more about these frontier companies, volatility will become harder to ignore. Thinking you’re fully diversified just because you own a broad-based index may become a fool’s errand.
Fluctuations in SpaceX stock aren’t going to materially move an entire index, but the market’s concentration in technology and AI continues to deepen and AI’s share of market attention keeps growing. Whether it’s SpaceX, OpenAI, or Anthropic, I find it hard to believe that it’ll be smooth sailing in public markets once Wall Street can comb through every line in their financial statements. And that’s not to mention private tech firms like Stripe or Databricks that may entertain public markets at multi-hundred-billion-dollar valuations soon, which would only deepen public market concentration in tech.
Also, side note: if SpaceX were to go public at a $2T valuation, that would be wild given it is estimated to have generated roughly $20B in 2025 revenue. Meanwhile, Amazon is trading at a little over $2T and posted roughly $750B in revenue in 2025. Really makes you think.
Hot Take #2: Salesforce is the software stock to own coming out of the SaaS apocalypse.
Last month, I attended Salesforce’s Agentforce World Tour conference in Manhattan. Work conferences can be hit or miss, but I’m pleased to report that the show was worth my time. With that said, the food was bad. Both from a selection and taste perspective. You’d really expect better from a company worth nearly $150 billion.
Jokes aside, I was impressed with Salesforce’s continued success in integrating AI into their core product. Agentforce 360 turns your CRM into an agentic operating system, acting as the intelligence layer for your company’s data. Meanwhile, Slack has continued expanding their Slackbot, which similarly acts as the intelligence layer and integration capability across all your company’s internal and external communication. Employees can leverage Claude (or their AI model of their choosing) with the Slack interface.
Salesforce has what AI labs need: context-rich, hyper-specific data because customers have been storing their company’s central nervous system inside Salesforce for decades. You’re not going to get rid of Salesforce, especially since they’ve successfully embedded AI into their core product. As a Slack user, I’m impressed by SlackBot and the long list of available MCPs. If I’m scaling a company today, I’m leaning heavily into Slack given its ability to consolidate internal communication and AI into one platform. It’s perfectly situated as the horizontal layer within a company’s tech stack.
I’ve completed some really cool vibe coding projects (one where I replaced internal marketing analytics software that is saving the company I work for five figures per month). But I would never even consider trying to vibe code Slack. That would be crazy. Even Anthropic leans heavily on Slack. If the masterminds behind Claude aren’t trying to build a new workflow communication system, why would any other company think they could pull it off? No one is cancelling their Slack subscription.
The elephant in the room is multiple compression. AI does fundamentally challenge how investors think about a software company’s terminal value, due to its impact on the long-term growth rate. Seat-based software contracts may become less sticky, assuming clients reduce their labor force thanks to AI efficiencies. And AI-native companies will rely more on creating their own internal tools.
Even if I don’t believe Salesforce will be affected in the long term, its association with software stocks could impact its valuation. The narrative checks out for me: Salesforce looks poised for steady growth, but multiple compression could keep its stock price down.
Disclosure: I own Salesforce stock.