‘AI rollup’ investors think services firms can trade more like software companies. Here’s what they get wrong

Nathan Benaich is the founder of Air Street Capital and author of the State of AI Report. Nikola Mrkšić is the CEO of PolyAI.

Across the technology investing world, investors are scaling their bets on a seductive thesis: Generative AI will transform low-margin service businesses into high-margin software companies. Several well-known platform venture firms have committed billions to this strategy and have begun to make their bets. Here’s how the thesis goes:

First, acquire...