The Nightview Fund Q2 2026 Letter

Nightview Capital 76 Followers Follow 5 Share Save Play ( 18min ) Comments Summary We are long-term owners, which people sometimes mistake for inactivity. In truth, a long-term portfolio still requires regular maintenance. Over the quarter, we exited four positions: Meta, Intuitive Surgical, Shopify, and EchoStar. We bought Las Vegas Sands and MGM Resorts, and we added meaningfully to Wynn Resorts. Together, gaming and hospitality became one of our larger thematic exposures by the end of the quarter. primeimages/iStock via Getty Images Is the Market Mispricing AI Concerns on Software? It’s easy to forget now, but on the night of December 31, 1999, a good portion of the developed world went to bed nervous. For decades, programmers had saved precious memory by writing years with two digits instead of four. Nineteen ninety-nine was “99.” The year 2000 would read as “00.” Computers, the theory went, would take that for 1900 and lose their minds. Planes would fall out of the sky. Power grids would fail. Bank balances would vanish. Elevators would freeze between floors. People bought generators. A few bought bunkers. (Some countries, like China, took it so seriously that officials forced airline executives to book flights on Jan. 1, 2000—just to ensure their employees were taking the matter seriously.) Then the clocks rolled over, and almost none of it happened. Y2K turned out to be a nothingburger. Markets are very good at identifying genuine risks. They are often much worse at sizing them. Time and again, the crowd spots a real problem, then overcorrects, pricing assets as if the worst version of the fear has already arrived or whose outcome is set in stone. Psychologists call this “anticipatory anxiety.” The dread of the thing tends to outrun the thing itself. Does the market have anticipatory anxiety today about what AI will do to some of the largest software businesses in the world? We think it plainly does. The mood around software is—to put it lightly—dim. Of course, some of that fear is warranted. But when the market paints an entire category with one brush, it tends to leave bargains underneath for those of us willing to take the longer view. AI Is Already in the Walls We are optimists about AI for the same reason we are optimists about most powerful tools. Given enough time, people use them to make more, do more, and, eventually, build more. Artificial intelligence is already being woven into the fabric of how organizations operate. In a previous letter, we compared it to electricity. It will find its way into nearly every industry and nearly every life. The internet did the same thing about thirty years ago. It made the economy larger, and almost everyone’s slice grew along with it. So when we tell you we are skeptical of the market’s fear about software, please do not hear us saying that AI is overhyped. We are saying something closer to the opposite. AI is real enough—and useful enough—that a great many businesses will thrive by absorbing it. So yes, some business models are fragile in the face of AI. Yet, we believe some of the software companies being branded as dead on arrival will actually grow and strengthen through the incorporation of AI. And as the market is now punishing many software companies, we believe highly compelling opportunities are now presenting themselves. The SaaSpocalypse Beginning early this year, the market staged one of the fastest repricings of an entire sector we have seen in some time. Software stocks shed enormous value in a matter of weeks. The theory driving the selling was simple and, on its surface, frightening. If AI agents can do the work that software used to charge you per user to do, then the per-seat subscription model that built the industry is finished. Enterprises will build their own tools and nobody will pay for licenses. The moats will drain overnight. That was the theory, at least. Some numbers to convey the mood: By the spring, forward earnings multiples on software had fallen below the multiple on the broad market for the first time anyone can remember, a remarkable inversion for a sector that spent the last decade as the market’s favorite child. The major software index fell more than twenty percent while the broad market performed well. The bears are right about something important. AI genuinely does change the economics of software. Gross margins that used to sit comfortably in the eighties come under pressure when every query burns compute. Simple point solutions—the single-feature tools that never had much of a moat to begin with—are in real danger. Some software companies deserve to be repriced, and perhaps a few deserve to disappear. Again, we just think the market did what markets tend to do. It took a real and specific risk and painted it across an entire sector. These overcorrections to whole sectors seem to be occurring more frequently yet the stronger players will inevitably find their level. Even some of the loudest voices in AI have said