Fleeting Optimism in a Digital Winter

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The indices tell a story, of course. The S&P North American Technology Software Index, a collection of 111 hopes and anxieties, has retreated a full thirty percent from its September peak. A bear market, they call it. One wonders if the bear feels any particular satisfaction. The prevailing narrative attributes this decline to artificial intelligence, a convenient scapegoat. It is always easier to blame a new invention than to acknowledge the inherent fragility of things.

There is talk of AI disrupting the software industry, automating away the tasks that once justified entire departments. Sales, marketing, finance, even legal—all potentially rendered superfluous by algorithms. One imagines the quiet desperation in the corner offices. The tools—Cowork, for instance, a name that promises connection but delivers efficiency—are merely symptoms. The real ailment is a certain lack of imagination, a reliance on metrics instead of meaning.

Mr. Huang of Nvidia, a man accustomed to seeing the future, dismisses the panic as “illogical.” Perhaps. Or perhaps he simply has a vested interest in the continuation of the current order. It is a rare thing to find a prophet without a price. Regardless, the market remains unconvinced. And in its skepticism, there is a certain weary wisdom.

One is urged to view this as an opportunity, a chance for “patient investors.” A curious phrase. As if patience were a commodity readily available in a world obsessed with instant gratification. Still, Shopify and AppLovin are presented as possibilities, two companies attempting to navigate this uncertain landscape. One approaches them not with enthusiasm, but with a detached curiosity, like observing specimens under glass.

Shopify: A Promise of Commerce, Slowly Realized

Shopify, a platform for merchants, a digital bazaar. It offers a centralized dashboard, a place to manage sales across various channels. Physical stores, online marketplaces, social media—all funneled into a single interface. Gartner, a consultancy with a vested interest in labeling things, deems it a “leader” in digital commerce. Rapid innovation, they say. Enterprise-grade reliability. One wonders if the merchants themselves would agree.

The company now courts larger clients, adding features for business-to-business commerce. A sensible move, perhaps. Though it feels a bit like a small town attempting to become a metropolis. Shopify has also embraced the AI era, collaborating with Alphabet on the Universal Commerce Protocol. Orders from AI search have reportedly increased fifteenfold. A promising sign, if one believes in the power of algorithms to conjure demand.

The current valuation—75 times adjusted earnings—is, shall we say, optimistic. But one is assured that operating expenses will decline, that AI developer tools will unlock new efficiencies. A familiar refrain. The price-to-sales ratio—10 times—is more reasonable, though still not inexpensive. Analysts predict a 26% increase in sales for 2026. A modest projection, given the prevailing hype. The median target price is $162.50, implying a 55% upside. A pleasant fantasy, easily shattered by the next market correction.

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AppLovin: The Art of Persuasion, Quantified

AppLovin, a purveyor of adtech, a company that specializes in the art of persuasion. It began in the mobile gaming industry, helping developers monetize their creations. Now it has expanded into web-based advertising, offering a self-service platform that promises to automate every aspect of the process. A seductive proposition, if one believes that marketing can be reduced to a series of algorithms.

Axon, AppLovin’s machine learning ad engine, is lauded as “best-in-class” by Morgan Stanley. It excels at targeting campaigns, leveraging data gathered from Max, a mediation platform that connects publishers with ad networks. High-quality data, they say, is used to train Axon’s AI models. A virtuous cycle of surveillance and manipulation.

AppLovin reportedly delivers a 45% higher return on ad spending than Meta Platforms, and a 115% higher return compared to TikTok, Pinterest, Snap, and YouTube. Impressive numbers, if true. Mark Giarelli at Morningstar claims that Axon affords AppLovin a “durable competitive advantage.” A bold assertion, in a world where advantages rarely last.

The current valuation—38 times earnings—is reasonable, if not cheap. Analysts predict a 50% increase in earnings for 2026. The median target price is $710, implying a 92% upside. A tempting prospect, for those willing to gamble on the future.

One is left with a sense of quiet resignation. The market will rise and fall, companies will thrive and fail, and the relentless march of technology will continue. It is a story without end, a melancholy dance of hope and disappointment. And in the end, all that remains is the fleeting memory of a promise, slowly fading into the digital winter.

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2026-02-13 12:12