# Software incumbents may retain value through installed bases

Markdown copy of https://realalpha.app/s/software-incumbents-may-retain-value-through-installed-bases/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Dan Ives](https://realalpha.app/people/dan-ives/) · Partner & senior managing director, tech analyst, Yorkville Ives · Built a globally recognized technology research franchise, covering software and broader technology markets for over 25 years.
- Host: [Steve Eisman](https://realalpha.app/people/steve-eisman/)
- Show: The Real Eisman Playbook
- Episode: [2026 Predictions with Dan Ives and Chris Verrone | The Real Eisman Playbook Episode 40](https://realalpha.app/v/KByibe1S6l8/), Jan 5, 2026
- Moment: 40:22 to 43:27 of the episode (3 min), playing on https://realalpha.app/s/software-incumbents-may-retain-value-through-installed-bases/; the episode from there: https://realalpha.app/v/KByibe1S6l8/?t=2422

## Quote

> “But they have **massive install bases**. They're building out their own AI suites.”
> — [Dan Ives](https://realalpha.app/people/dan-ives/) at [41:13](https://realalpha.app/v/KByibe1S6l8/?t=2473) · The Real Eisman Playbook

## Takeaways

1. Large installed bases can help software companies defend their position.
2. Ives expects AI use cases to move into software products.
3. The software-to-semiconductor ratio may be starting to bottom.

## About this segment

Dan Ives argues that AI may erode parts of software businesses but not erase their large installed bases, and expects more deployment and consolidation. Verrone notes that software’s relative performance may be bottoming.

From “2026 Predictions with Dan Ives and Chris Verrone | The Real Eisman Playbook Episode 40”, Jan 5, 2026. [Watch the full episode](https://realalpha.app/v/KByibe1S6l8/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[40:35](https://realalpha.app/v/KByibe1S6l8/?t=2435) that's been kind of hasn't done so well, what you think might do well. And let's talk about sectors that have been done poorly, like the defensive. Is there any hope? Let's talk tech first. For me, it's really software. I mean, right now, software is like a do not enter police lines, like yellow tape. Salesforce is turning. I know. So if I said it would be like Salesforce, Adobe, ServiceNow, like the traditional software.

[41:02](https://realalpha.app/v/KByibe1S6l8/?t=2462) So what would be – everybody knows the bear case. The bear case is AI is reducing the cost of creating software. The moats are not as big as they used to be. Get out of the way. What's the contra argument? So my contra-argument is like you cannot discount the install base of what Benioff and Salesforce have built. These install – like, look, these software models, okay, are pieces of them getting eaten by AI?

[41:26](https://realalpha.app/v/KByibe1S6l8/?t=2486) Yes. But they have massive install bases. They're building out their own AI suites. The software phase of AI is now coming because companies have built the infrastructure that they could actually start to deploy these use cases. they couldn't do it till basically you know the last few months so my view to your point like i'm a believer that you're going to see a turnaround some of these software names i also think you're going to see massive m&a in software in software i think if there's going to be one area you talk about overdue are you talking like regionals or you know in terms on the on the banking side software is so overdue for m&a why why why because there's so many companies where like maybe they had like a certain silo and the reality is is that that's being compressed growth's gone from 40 percent to 50

[42:17](https://realalpha.app/v/KByibe1S6l8/?t=2537) 15%, and especially in it's mid-cap software. You know, Dan, I'm sure you look at it. I would encourage everyone to take a look at this. We look at the software versus semi ratio. We look at it equally weighted. So it's not just, you know, what is NVIDIA doing versus Microsoft? What is the average software stock doing versus the average semi? That might be starting to bottom here. The last couple of weeks, there's been some positive price action there, which we haven't seen effectively all year.

[42:40](https://realalpha.app/v/KByibe1S6l8/?t=2560) You're starting to see Salesforce inflect here a little bit. I'm not there yet on Adobe. Service. I mean, ServiceNow, I mean, they have washed out Snowflake here as well, to your point earlier, where, like, those start to get interesting, especially when you think about it through the lens of beta, right? Semis have been the hood ornament of beta for the last four, five, six, seven, eight months, basically since the low in April.

[43:04](https://realalpha.app/v/KByibe1S6l8/?t=2584) Beta tends to burn very, very bright for six, seven, eight months off a low. Then it becomes more of a normal performing factor. So I wonder if the beta impulse is probably behind us at this point. Interesting. Yeah. What about you?