Wall Street’s 60/40 formula was born in 1952 — the same year as the first credit card. A lot has changed since.
That’s why we created a new approach — The H.E.A.T. Formula — to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.
Table of Contents
🔥 Here’s What’s Happening Now
The market shook off “weak” NVDA earnings to close higher again. Normally you would expect today to be dead ahead of the long weekend, but PCE is this morning and crypto is selling off again.
Keeping with our theme of buying Trump’s favorite stocks and sectors the Drone stocks are ripping this morning….
🚨 NEW: Pentagon Launches Task Force 401 to Counter Drone Threats 🚨
Defense Secretary Pete Hegseth has ordered the creation of Task Force 401, a joint interagency unit to combat the rapidly growing threat of hostile drones.
The task force will unite the Army, Navy, Air Force,
— #Kristy Tallman (#@KristyTallman)
7:34 PM • Aug 28, 2025
🧠 Software’s Death by AI? Not So Fast
“We think this idea of software on demand is going to be one of the defining characteristics of the GPT-5 era,” OpenAI Chief Executive Sam Altman said at the event. He is actually a bit late to the party; Nvidia NVDA CEO Jensen Huang proclaimed in 2017 that “AI is going to eat software.”
Winners and Losers as AI Meets the $1.2 Trillion Enterprise Software Market
Executive Takeaways
Enterprise software spend is still growing double-digits (~$1.2T in 2025, +11% YoY), making it the single largest line item in tech budgets.
AI hype (vibe coding, GPT-5 demos, “AI will eat software”) has pressured software multiples, but wholesale disruption is unlikely.
Winners: entrenched SaaS incumbents embedding AI natively (Salesforce, Workday, ServiceNow, Microsoft, Adobe).
Losers: smaller SaaS point-solutions with shallow moats and commoditized functionality; also high-valuation cloud stocks facing rotation.
The next phase of AI + software is not “replacement” but multi-agent orchestration across apps, which no one has cracked yet.
Context: Why Software Looked “Under Threat”
Sam Altman’s GPT-5 demo showcased “software on demand” (aka vibe coding), raising the specter that end-users could bypass packaged SaaS.
Jensen Huang’s 2017 line—“AI will eat software”—is again in circulation.
Meanwhile, macro headwinds (trade wars, inflation, rate uncertainty) already slowed net-new IT spend; AI infra capex is crowding budgets.
Result: cloud software indices are down YTD, lagging the Nasdaq/S&P.
Why Death Is Exaggerated
Complexity moat: mission-critical apps (HR, ERP, CRM, financial controls) are highly regulated, tightly integrated, and too complex for first-gen AI.
Trust moat: 65%+ of the Fortune 500 already on Workday, Salesforce, etc.—not going to rip out controls for a startup chatbot.
Execution moat: Incumbents are embedding AI themselves—Salesforce Einstein GPT, Workday AI agents, ServiceNow AI copilots, Adobe Firefly for creative workflows.
Proof point: Even JPMorgan’s CFO, experimenting with vibe coding, admitted it’s “amazing” but not a replacement for enterprise systems.
Winners
🏆 Incumbent SaaS Giants
Salesforce (CRM) – embedding AI in customer data/automation loops; deep install base means sticky revenue.
Workday (WDAY) – entrenched in HR/finance; CEO: “not one Fortune 500 will let a startup run their back office.” Pricing power intact.
ServiceNow (NOW) – strong workflow orchestration; uniquely positioned if multi-agent systems become real.
Microsoft (MSFT) – Office + Azure Copilot strategy; owns distribution into nearly every enterprise.
Adobe (ADBE) – creative monopoly, Firefly AI features integrated into Creative Cloud.
🏆 Infrastructure + Integration Plays
Datadog (DDOG), Snowflake (SNOW) – as AI/agents scale, observability and data integration become mission-critical.
Okta (OKTA), CyberArk (CYBR) – identity/security layers remain mandatory; AI magnifies security risk, increasing their value.
Losers
❌ High-Multiple Cloud “Tourist” Names
Point solutions with thin differentiation (smaller HR tech, niche expense mgmt, collaboration tools) are vulnerable.
Many were trading at high EV/sales multiples in the 2020–21 SaaS bubble; AI makes their TAM story harder to defend.
❌ Legacy “middle tier” vendors
Mid-sized players without scale to build AI in-house, but too big to be agile. They risk getting squeezed by incumbents and startups alike.
❌ Investors chasing hype over fundamentals
Early AI-native “replacement” startups are more likely to stumble (hallucinations, regulatory risk, trust gaps) than dethrone incumbents.
Example: GPT-5’s launch triggered criticism about accuracy, undermining the “replacement thesis.” Meta’s struggles with Llama 4 show the difficulty of scaling.
The Next Frontier: Multi-Agent Systems
RBC and others highlight the real unlock will be AI agents that execute across systems:
e.g., hiring a salesperson → touches HR identity, expense cards, training, CRM.
No vendor has cracked this yet. The leader will likely be an incumbent with workflow reach (ServiceNow, Microsoft, Salesforce).
This is where asymmetry lies for investors.
Investment Playbook
Core Longs (High Conviction Winners): CRM, WDAY, NOW, MSFT, ADBE.
Selective Adds (Infrastructure): DDOG, SNOW, OKTA.
Avoid / Hedge: richly-valued point-solution SaaS; overhyped “AI-native” software replacement stories.
Optionality: Watch multi-agent progress—likely to be M&A driven (large SaaS buying AI agent startups).
AI isn’t killing enterprise software—it’s making the moats deeper. Fortune 500 CIOs want trust, security, compliance, and integration—not vibe coding experiments. The $1.2T software market isn’t shrinking; it’s evolving. Winners are the incumbents embedding AI into sticky platforms; losers are overpriced point-solutions and pure AI-replacement hype.
Translation for investors: don’t short the software majors; look to add on weakness. The true asymmetry will be when multi-agent AI systems emerge—and the companies that own enterprise workflows (Salesforce, Workday, ServiceNow, Microsoft) are the only ones positioned to win that prize.
Ticker | Company | Positioning in AI Era | Catalysts | Risks | Rating |
|---|---|---|---|---|---|
CRM | Salesforce | Deep CRM/automation moat; embedding AI agents (Einstein GPT) | Multi-agent orchestration; cross-sell AI seats; M&A | Growth decel in macro slowdown | Core Long |
WDAY | Workday | Entrenched in HR/finance; high trust barrier | AI copilots in HR/payroll; Fortune 500 stickiness | Margin pressure from AI R&D spend | Core Long |
NOW | ServiceNow | Workflow king; uniquely positioned for multi-agent orchestration | New AI products; cross-enterprise automation | Valuation premium; execution | Core Long |
MSFT | Microsoft | Distribution everywhere (Office, Azure); AI copilots ubiquitous | Continued Azure/OpenAI integration; enterprise adoption | Regulatory risk; high expectations | Core Long |
ADBE | Adobe | Creative suite monopoly; Firefly embedding AI | Generative content demand; enterprise subscriptions | Competitive encroachment (Canva, open AI tools) | Core Long |
DDOG | Datadog | AI observability & monitoring | AI workloads expansion; new product attach | Competitive cloud-native tools | Selective Add |
SNOW | Snowflake | Data integration & analytics backbone | AI model hosting; enterprise data cloud | Execution on AI pivot; valuation | Selective Add |
OKTA | Okta | Identity/security for AI era | Identity AI features; demand for compliance | Past breaches; execution | Selective Add |
TEAM | Atlassian | Collaboration/DevOps; integrating AI copilots | Dev productivity gains | Susceptible to disruption by AI coding tools | Hold / Neutral |
MNDY | Project mgmt SaaS; thin moat vs. AI workflows | SMB adoption; AI task bots | Easily replicable features | Avoid | |
AI-native startups | (private/public small-caps) | Hype-heavy “replacement” narratives | Early adoption, M&A | Accuracy, trust, regulatory hurdles | Avoid / Hedge |
📈 Stock Corner
Today’s stock is Alibaba (BABA)…..
📬 In Case You Missed It
The key difference between Income Blast and other option income ETFs…..
The ETFs that Tuttle filed yesterday are different from other premium income ETFs. The innovation is that the each ETF writes and buys a pair puts, instead of writing calls to generate "income".
What this means: Constant upside exposure in rising markets.
With covered call
— #ETF Hearsay by Henry Jim (#@ETFhearsay)
9:41 PM • Aug 28, 2025
🤝 Before You Go Some Ways I Can Help
ETFs: The Antidote to Wall Street
Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know
Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy
Tuttle Wealth Management: Your Wealth Unshackled
Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge
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