Summary

• For the better part of two decades, software companies and information services firms have been rightfully viewed as the archetypal quality compounders.
• The five largest hyperscalers are projected to deploy over $700 billion in aggregate capital expenditure this year, an increase of over 60% from 2025.
• If high capital intensity is the story for large technology companies providing the AI infrastructure of the future, the story for software companies is one of gradual moat erosion.

For the better part of two decades, software companies and information services firms have been rightfully viewed as the archetypal quality compounders. Once built, these businesses have been fortresses protected from competitive encroachment, resulting in significant pricing power and