Deep value investor Lee Roche: Like trading a "phone book", you can still make a big profit from software stocks.

Deep value investor Lee Roche pointed out that when the market expects a company to "die immediately", but in reality it is just in a "slow decline", the investment returns could be very surprising. Roche believes that although artificial intelligence weakens the "moat" of software companies, it does not mean that their final value is zero. The price-to-earnings ratio of many software stocks has fallen to levels not seen since the 2008 crisis. Like early tobacco companies, paper directories, or traditional retail, these businesses may be in structural decline, but their vast enterprise customer base, long replacement cycles lasting several years, and continuous generation of free cash flow can still make them "cash cows" in the coming years. The switching costs for software are extremely high, and large software companies have data, customer relationships, distribution channels, and domain expertise that are difficult for AI startups composed of just two employees to overcome.