AI = More Software Not Less, Amazon Hiring…

Happy Friday everyone. Busy week at Avory as earnings season picked up and we triangulated signals across the economy, the Fed, and software. What stood out most was AI. It’s showing up everywhere. Google and Amazon both reported this week and capital expenditures are surging. These businesses are shifting from asset-light models to increasingly asset-heavy ones. That transition is important and it’s something we’ve been calling out for a while as a risk to the perception of those businesses. We saw last week Meta being the clearest beneficiary of AI, where revenues are expected to grow 30%. We still believe Meta is the cleanest way to play AI.

On the software side, earnings were constructive. One of the more important signals came from Atlassian (not a holding for us), reported this week. We came in with three questions and they passed all three. No pricing, seat, or margin pressure. For best-in-class platforms with multiple products, AI looks more like a tailwind than a headwind.

On the Fed, there’s some concern around the new chair given his hawkish history, but the administration has been clear on the goal. Cut rates. Markets are pricing roughly 75 bps of cuts in 2026, which lines up with our expectations coming into the year.

Net takeaway this week: AI investment is accelerating. Emotions are high but software fundamentals remain intact for the best platforms out there. And the rate backdrop is gradually becoming more supportive. Hard to be bearish.

Here is the summary if you want just that:

• Cash App tops downloads…

• 28% 12 months out for software…

• Jobs creeping back…

• Atlassian suggests software okay…

Here's one data point before we get going.

When software is this weak, what happens next historically? 12-month returns average 28%.

Many of these companies are dominant platforms with network and data advantages, moats that help the best companies survive periods of change. AI is a change agent, literally, and the most durable companies will likely benefit as more software is created, not less. Our investment philosophy focuses on durable companies, not single-product solutions, vey key and allows for us to sleep well.

Now before we get into app downloads and earnings to see where consumer and enterprise behavior is heading, this stood out.

We’re starting to see early signs of pickup across job areas that are often labeled as “AI at risk.” Professional services are close to turning positive, and the commercial, IT, and ASA staffing indices are stabilizing after a long slide. While timing coincides with AI, it also coincides with a COVID hangover. I actually think normalization post COVID has been more influential then the other.

Why do I say that? I spent a good chunk of last week scanning job postings at the leading AI companies and trying to understand what they’re actually hiring for.

These are the labs building the technology, they know exactly where AI is today and where it’s heading, so in theory they should be the best signal for where jobs are going.

So what to make of it? Anthropic is hiring a Salesforce admin to run their CRM. That’s a very normal, very human role. That is also evidence that they are using best in class software vendors. Hmm….

They’re also hiring a content designer, which is funny given the narrative that design is just “prompting a chatbot.”

Replit is hiring an executive assistant. For me, that tells me a lot. Things may change over time, but right now, this looks more like role evolution than replacement, and it’s something I’ll be watching closely.

Speaking of Anthropic, they’re reportedly in the market targeting a $350B valuation. I’d love to see that happen. Why? We own Zoom, and our detective work suggests Zoom’s investment in Anthropic alone could be worth roughly $1 to $3.5B. That’s meaningful for a company with about $8B in cash, no debt, and additional stakes in Perplexity, Suki, and CoreWeave. There’s a lot of hidden value inside Zoom beyond the core thesis, and I don’t think the market fully appreciates that yet.

One more quick point on jobs. Amazon laid off 10,000 employees and the immediate narrative is AI or macro. But when you have 1.5M employees, some of this is just cleaning house. What’s getting far less attention is that Amazon currently has about 19,444 job openings, here is my screenshot. That looks a lot more like ongoing hiring and role reshaping than a company pulling back.

What about other data to inform software? Seller outlooks for the future have improved. For example, Zoom, one of our holdings, saw a 12% lift in seller outlooks. The same growth rate as Shopify.

Now we also got earnings from Atlassian. I love the company and the products. We are NOT investors, stock-based comp is way too high. But this was the most important earnings report this week for anyone in software. I had three questions.

Are they seeing pricing pressure?

Revenue +23% Y/Y. Cloud +26% Y/Y. Expanding margins. That’s higher ARPU and upsell, not discounting.

Are they seeing seat pressure?

Cloud NRR at 120%, improving again. Customers using AI are adding users faster, not cutting them.

Are they seeing net new demand?

RPO +44% Y/Y and $1M+ ACV deals nearly 2x Y/Y. Enterprises are committing more, not less.

Conclusion is pretty straightforward. Nope, nope, and nope.

Now let me get to the app economy. For a long time this has been a tell for us on what consumers want at any point in time. So let’s look at 2025 since we now have the numbers.

The app economy is massive and still growing, even if downloads themselves are slowing. What jumps out is time spent. 3.6 hours a day per user is a lot of attention, and that attention is still turning into dollars. We saw that in Meta’s massive earnings beat this last week.

We know that AI assistants are everywhere right now, and the data backs it up. They are leading in downloads and already showing real revenue traction. This is quickly moving from curiosity for some to habit for many.

We also know AI is already helping content creators in very real ways. Just look at Meta’s revenue growth, averaging mid-20% for the last 10 quarters and now guiding to over 30%.

When we look at who lead downloads in their categories, some stick out. We are investors in Block and Cash App is sitting at the top of U.S. downloads for its category, which says a lot. ChatGPT at the top of Ai isn't shocking, along with Netflix.

When I dig little deeper into payments. Cash App the 2025 leader in digital wallets and P2P is a big deal. The data in 2025 ended up showing up ahead of PayPal and Venmo, which tells you share is still shifting. Not Covid fast, but healthy. More downloads today usually means more engagement and optionality down the line. Spending time at their investor day months ago, we are confident.

If we look at time spent per category one name for us sticks out. Zoom still being one of the most used apps is kind of wild when you think about it. The pandemic bump is long gone, but usage stuck. I’d say that is what it looks like when a product becomes infrastructure.

Shifting to some gaming. Roblox owning most of the traffic here (74% of web visits to Roblox) shows how winner take most these platforms are. This is a good reminder of what helps create a “moat”. For Roblox or other scaling platforms, when users, creators, and developers pile in, it’s hard to unwind that network impact. You see the same dynamic playing out in fintech and productivity apps too.

This chart is a good reminder that mobile gaming is still very much a global phenomenon. Roblox shows up at or near the top across multiple countries, especially in Mexico, Brazil, and Argentina, which tells you the platform effect is real.

Now some are still worried about consumers and the economy. I do not agree with that view, and it has been proven correct. Here is a datapoint I got this week showing consistent survey where people feeling secure vs insecure about their financial situation is improving from 2022 lows.

Also, we own Zillow, and it's taken a hit over the last week as software names get pressured. I don't categorize them as software, but to each their own. The big takeaway from this data point: what does Zillow know that we don't? They're aggressively hiring mortgage originators. As a shareholder, I like the signal.

I have like 7 more data points to share, but will save for next week!

Have great week/weekend.

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