The Future of Software: AI, Automation, and the Rise of Digital Tollbooths

Technology and finance are changing rapidly, and software platforms are at the center of it all.

They're powering everything from artificial intelligence and fintech to e-commerce and cloud, and AI isn't just about cotton costs, but it's also supercharging tech stocks, and companies are using automation to run leaner and grow faster.

Now ETF design is also getting a makeover with custom indexes built around profitability, low debt, and real growth.

Joining me.

At the New York Stock Exchange today is John Tinsman, founder and CEO at AOT Invest.

John, great to have you here.

Thank you so much for joining me.

It's a pleasure to be here with you today.

Well, you're here at the New York Stock Exchange, and when we think about retail investing, we know that some key themes here have been artificial intelligence as well as fintech.

So when it comes to innovation in terms of fasts, what are we seeing here in terms of models?

Yes, so I think that the software space is more exciting than it's ever been.

Uh, in the history of software right now we have AI is kind of rewriting what software has the potential to do.

It's lowering software development costs pretty significantly.

And so for the first time in history we see a lot of big tech companies like Microsoft and Google and Amazon reducing their headcount for one of the first times ever.

At the same time they continue to accelerate their earnings growth, you know, so we're talking about a lot.

Of companies growing their earnings 50% year over year.

They're doing it for a multi-year period.

I mean, we've been, we've seen the economy and people, you know, there's always been talks about, you know, how's the economy doing, but we know over the last couple of years the Nasdaq is up 100%, right?

So there's another part of this sector of the economy that's just doing incredibly well, and I like to define it as software platforms.

So software platforms are really.

Software companies to me, but the problem is the GIs classification code of software that investors typically think of is software as a service, right?

And so software as a service falls short of defining a lot of software like Google.

We all know Google is a software service, but it's not in the software sector.

It's actually in communications.

And then you've got a company like Amazon.

And you've got companies that do e-commerce and web services, and you have companies like Visa also.

And so when you think about these sorts of software companies, you know, a company like Visa is automating global payments, right?

Every step of a payment is automated, so you don't have to pay with cash.

You don't have to connect the bank accounts.

It's just all done automatically, and I think that's the future of software and AI is going to help speed that up.

So the future is total automation of everything, so we all can do more with less, and that doesn't always mean Software as a service.

A lot of times they start today, I think the transformation of software is that they act as a digital toll booth, so they tax a small portion of revenue going through like an e-commerce site or you know payment processing like Visa or even digital advertising like Google, and so they take a cut of all the payments going through and they act more like a digital toll booth, but at the same time these these services that the software companies are providing are so incredibly valuable.

That nobody wants to imagine a life without using a credit card or a life without, you know, being able to buy something online or a life without a certain payroll software.

So they just provide so much value to the companies that they serve and the customers and they either make the money in new ways or they save the money.

And so that value proposition there is something when I think like what do I want to own in the future?

I want to own what has the ability to grow and what is always providing more value to people.

Yeah, so John, you just brought up some key names here and we're paying attention to Alphabet, especially because they'll be reporting earnings after the closing bell and some other mag 7 names here as well.

But when we're talking about AI plays, we're watching Cat backs as well as spending.

So what we've seen Alon as Well as Robin Hood in terms of what they have exhibited in terms of shares, do you think this is a playbook that can also be repeated here?

Yes, so I own all these names in my funds the AOTG ETF and the SOFL ETF.

So I like all these names.

What's really exciting about Robin Hood and A Loving. is that we've seen them over the last year and to reduce their headcounts and so I think they're acting as the early movers in tech and so they've reduced their headcount leading to at the same time they maintain their high growth and continuing to provide value.

And so we've seen these companies grow their earnings at 100% plus rates.

We've also seen the stocks go up to over 300%, both of them in the last year.

And so my question for this is if this continues to play out across big tech, and these are the early leaders.

The next couple of years in tact could be the best we've ever seen.

And when we're looking at elevated levels for the major stock averages, in particular, the S&P 500, year to date, we're looking at gains for the major averages.

We know that retail investors are taking risks here.

So when it comes to ETF strategies, what are some of the risks, especially as we're concerned about concentration risk here?

Yeah, I mean, I think it's important to understand when you think about technology that if you look at the 5 year charts, if you look at the 10 year charts, if you look at the 20 year charts, it's the number one top performer in all of them.

So it's definitely, I think something you don't want to be underweight.

I think the question is, you know, do you want to be equal weight or how overweight do you want to be?

People like me, when I think about the risk.

I think about these are the most profitable companies on Earth.

These are not like in the dot-com bubble.

These are blue chip, S&P 500 companies.

They have very stable revenue streams and every dollar they put back into their product, they continue to innovate much faster.

So to me, I see a lot more risk in some of the traditional.

Companies like Boeing that are, you know, already very leveraged, they're having a hard time earning a profit on their existing sales, and scaling the business anymore seems next to impossible.

So to me as an investor, I want to own what I think can be bigger in a couple of years, and the biggest risk is not doing that in my opinion.

OK John, well thank you so much for joining us.

We will have to leave it there, but thank you for sharing your perspective.

Thank you.