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AI Poses Existential Threat to Software Firms, Warns Fund Manager

2/18/2026

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Summary

Story summary

Nick Evans, a fund manager at Polar Capital LLP, warns that application software firms face existential threat from artificial intelligence (AI).
His $12 billion technology fund has outperformed 99% of peers by selling software stocks and foresees a 22% decline in U.S. software this year, retaining a small Microsoft stake.
Evans says AI tools can replicate and modify existing software, increasing competition from in-house solutions.

History

Historical Context

The IBM Personal Computer, launched in August 1981, transformed the software industry by establishing a standard architecture that spurred third-party development. By 1990, Microsoft dominated the PC operating system market with a 90% share. Today, concerns arise as AI threatens traditional software firms, potentially leading to a 22% decline in U.S. software revenue, reflecting ongoing shifts in the tech landscape.

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Story summary

Nick Evans, a fund manager at Polar Capital LLP, warns that application software firms face existential threat from artificial intelligence (AI).
His $12 billion technology fund has outperformed 99% of peers by selling software stocks and foresees a 22% decline in U.S. software this year, retaining a small Microsoft stake.
Evans says AI tools can replicate and modify existing software, increasing competition from in-house solutions.

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