The confluence of consultants and AI is “the main show”

I increasingly think the confluence of consultants and AI is “the main show”

In 2025 I wrote the “Big Rug” where I argued that AI was going to destroy software and IT services and managed to realize that wasn’t going to happen before the grenade went off

The first leg of the re rating was just vibe coding being mostly vibes. The second leg was Snowflake type apps doing incredibly well helping orgs manage complexity. Atlassian was the real face melter - as it showed managers need a harness of harness of sorts bc ai driven orgs are so absurd. The third leg was Claudeforce, and Anthropic hiring an army of FDEs

This was a more severe leg - because one of the biggest anti software memes was that every company would customize its own CRM

But the fourth leg - is one I find much more interesting. Accenture beat earnings aggressively. Note - this is an org with 800,000 employees. It’s the canonical “AI will replace this” business. Alongside this - you have ppl accusing Cognition of being like Wipro / infosys but meanwhile the money making take is closer to wipro and infosys being closer to cognition

You have a slow moving economy filled with boomers who need an ai strategy and you need adults in the room to roll it out or everything breaks in Prod

The most recent employment report was telling. Ppl tried to jam the story “AI is halting hiring” but bonds closed red on the day.

A single number can’t override the sentiment shift of ppl thinking Accenture would lose half of its employees and then not only that not happening, but hiring expanding there and at salesforce as “enterprise ai” becomes a thing

There’s a “Goldilocks ai spend” situation where you simultaneously have everyone spending on inference but also the economy not really decelerating bc people don’t lose their jobs. And any slow down is offset by Trump screaming “accelerate” to make sure his venture investments print.

And we are firmly in that - mimetically right now

Left curve is Claude force and right curve is the unfalsifiable bull case of Anthropics wet lab or OpenAI solving all math quietly with unreleased models. Mid curve is fading AI or going full Michael Burry wearing his Christian Bale Big Short t shirt like an aging house elf

In reality it’s the wrong Christian bale character. It’s more of a Patrick Bateman market where 27 year old sales executives are peptide maxing earning mid 7 figs for selling ai transformations to bloated corporations

But behind all of this is the donning realization that Opus 5.5 is a different kind of model. It’s just better. It generates way less code bloat. The Internal CRMs it ships actually work and don’t break in prod. It’s clearly masterful at Tik Tok / marketing. Our feeds went from minimal ai slop to 24/7 just bc it somehow has good taste

OpenAI saying next models similar to- don’t bloat as much.

In the meanwhile there’s the “cutting my steak with a chainsaw” effect with frontier models. Using fable to make a dashboard is just overkill now with opus 5.5. Glm 5.3 kind of sucks. Kimi is okay. Can’t really use them. But they’re almost there. And are extraordinarily cheap. The 4.1 flash progress from 4 was crazy

So despite the market being the most excited it’s ever been about ai Goldilocks going forward we have the most extreme combination of “software being solved” and inference margins compressing just when they need to expand the most (ipo and credit stress)

My current mental model is that ai can’t stop bc it’s a national security priority. So Leopold wasn’t wrong - just early. So yes. I am bearish software and consulting here.

Even guys like Thiel who spent years saying we were stagnating are now saying we are accelerating. and Labs at some level at $1.5T+ valuations need to do what it takes to win. Which means launching their own software and products w unreleased frontier models. Which the wet labs / math are already foreshadowing

$ACN / $IGV lower vs $EWY $NVDA $GOOGL $SFTBY