CRM Earnings, a new NVIDIA competitor, Anthropic continues to lead dev, workflow spend. Alwis Thinking About Tech
Summary: (1) Our recent note “Channel Checks and Classes of SaaS” emphasized our bullishness on horizontal SaaS leaders (“We remain optimistic on the long-term soundness of SaaS companies like Salesforce, who control authoritative data, permissions, transactions, compliance, integrations, and are deeply integrated with their Fortune 2000, regulated, and risk averse clients”). CRM’s strong earnings yesterday and our recent channel checks support our view on the strength of CRM’s enterprise moat and capex efficient, high FCF business; (2) Anthropic continues as top share of spend on leading model/token trackers, aligned with Claude leading charts for higher value coding and workflow tasks; (3) lower cost Chinese models continue to lead overall token volume, e.g. ~50% of token usage on workflow execution; (4) Despite NVIDIA’s strong earnings results we are increasingly cautious on the long-term strengths of their core business as OpenAI joins the hyperscalers in entering the custom silicon market and announced strong performance for their new Jalapeno chip.Optimal’s 09/16 AI Infra Dinner in NYC is almost full, and Optimal is hosting our Luxury & Fintech Leaders Summit in NYC 10/29, please connect with your salesperson about attendance.
Charts of the Week
Figure: Custom AI Chips Pose a Threat to Nvidia’s Moat

Source: OpenAI
Figure: Top Models by Task: Each task’s leading model, ranked by share of spend on OpenRouter

Source: Optimal Advisory analysis, openrouter.ai
Figure: Top Models by Token Usage: Each task’s leading model, ranked by share of tokens on OpenRouter

Source: Optimal Advisory analysis, openrouter.ai
Figure: Card Spending data on purchases AI Labs

Source: Optimal Advisory analysis, Bloomberg Second Measure
Framework Implications
Our five frameworks: 1. Commoditized Middle of the Tech Stack. 2. Owning Endpoints, Customer Graphs, and Deep Enterprise Integrations. 3. Circular Capital. 4. Revenue Quality. 5. Supply and Technology Infrastructure Constraints.
Updating Framework 1: The commoditized Middle of the Tech Stack now expanding to High Perf Compute as NVIDIA is under new pressure beyond just the hyperscalers. Look for our future note on potential weaknesses in their accelerated computing moat.
Updating Framework 4: Revenue Quality: Salesforce’s fiscal 2Q27 results showed current RPO of $33.5 billion, up +14% y/y, capital expenditures of $171m for the quarter (up +27% y/y), and free cash flow of $1.1B.(up +81% y/y and well above $643m consensus expectations).

Figure: Annual Capex & FCF Mag6
Source: Optimal Advisory analysis, Bloomberg, Company Filings
Figure: Daily Indeed Job Postings T7D Y/Y

Source: Optimal Advisory analysis, FRED, Indeed
Figure: Demographic Analysis of AI Paid Users (Employer Size and Industry Employed)


Source: Optimal Advisory analysis, YouGov
The Optimal Tech Index Performance and Valuation Snapshot
Figure : OTI (Optimal Tech Index) Annual Returns vs. Benchmarks

Source: Optimal Advisory analysis, Bloomberg
Figure: Optimal Tech Index (Log Scale)

Source: Optimal Advisory analysis, Bloomberg
Figure: Optimal Tech Equal-Weight Category Index Performance (Log Scale)

Source: Optimal Advisory analysis, Bloomberg
Figure: Optimal Tech Megacap Index Components

Source: Optimal Advisory analysis, Bloomberg
Figure: Optimal AI & Compute Infrastructure Index Components

Source: Optimal Advisory analysis, Bloomberg
Figure: Optimal Software Index Components (Public Constituents)

Source: Optimal Advisory analysis, Bloomberg