Internet vs Software vs Semi
If you had a chance, which subsector of TMT would you want to cover and why? Be very interesting to hear people’s thoughts especially in today’s landscape.
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Based on the most helpful WSO content, here's a breakdown of the TMT subsectors you mentioned:
Internet: This subsector is highlighted as one of the most attractive areas within TMT due to its high growth potential. Metrics like Monthly Average Users (MAUs) and user growth rates are key indicators for future revenue growth. If you're looking for a dynamic and fast-paced environment with significant upside, the internet sector is a strong choice.
Software: Software is another high-growth area, often paired with the internet as a top choice for career opportunities in TMT. The sector benefits from the increasing shift to cloud services, enterprise adoption, and the scalability of software solutions. It’s a space with consistent innovation and demand, making it a solid long-term bet.
Semiconductors (Semi): While semiconductors are critical to the tech ecosystem, the sector is more mature compared to internet and software. Growth here is driven by advancements in technical standards (e.g., LTE) and increasing complexity in system design. Companies solving these challenges can benefit from rising unit sales and average selling prices (ASP). However, the growth trajectory is generally slower, and the focus is often on capital efficiency and shareholder returns.
Recommendation:
If you're seeking high growth and innovation, internet and software are the standout choices. The internet sector offers rapid growth and dynamic opportunities, while software provides scalability and consistent demand. On the other hand, if you prefer a more stable and technical environment with a focus on hardware and infrastructure, semiconductors might be your pick.
Sources: An Overview of Technology Media and Telecom (TMT) - Part 1 of 2, An Overview of Technology Media and Telecom (TMT) - Part 2 of 2, An Overview of Technology Media and Telecom (TMT) - Part 2 of 2, An Overview of Technology Media and Telecom (TMT) - Part 1 of 2
Internet. Other stuff is boring
I’ll make the case for each for the sake of providing a balanced view:
Consumer Internet - Lots of different business models (subscription, marketplaces, ads, etc.) within different sectors makes for a dynamic coverage. You can cover the majors, niche e-commerce, online travel, media streaming all of which have different business drivers and consumer behavior characteristics. E.g. covering all the OTAs during the pandemic like Booking, Expedia, Airbnb (sort of), Despegar, etc.
SaaS - More consistent business models with transaction, usage, and/or subscription monetization. Get to dig into various verticals that have unique dynamics and understand the (mostly) logical business buyer. With PLG vs more enterprise GTM you get to understand the business levers at a more granular scale since you can typically get more benchmarkable outputs like retention rates, attach rates, and sales efficiency. E.g. Covering API businesses across various verticals (Algolia, Twilio, etc.).
Semis - Higher barriers to entry with more complexity in the supply chain. You get to really understand the end to end process of building hardware and get to understand where in the value chain the opportunities are. Also if you love the science of the products it’s pretty fascinating to learn about the infrastructure innovations that can create a ton of downstream impact. E.g. GPUs and AI, sensor chips and smartphones, etc.
Note: Early on in my career I was gunning for Semis since I have family in chip design, but ended up starting out my career covering consumer internet in ER. I moved into VC and did more of the same but also worked on software deals. Now I’m a founder at a software company.
I’d say consumer internet was the most fun to cover but software is the most fun to build.
Why did you decide to transition from consumer internet to software? How did you have the skills expertise to understand a niche to build in software?
Don't you think people should focus more on less sexy sectors if pursuing a finance career? Have been hearing people saying TMT is too crowded and also commoditized.
I invest most $ where I'm best, but if I was starting over in a MM model, I would do software.
In an SM / more flexible model, I would do Internet.
Interesting, could you explain why?
Way more tradeable names in SW that have idio / modeling drivers imo
All 3 are now interconnected. internet companies spend on GPUs and supply chain, and cloud companies compete with infra software. good time to be generalist tech investor who can weigh economic shifts among all 3 sectors
I lol at this. One of these sectors is literally going through a generational demand cycle where estimates are going up and to the right, while the other two are going through literal existential crises daily about the terminal value of their business models due to the buildout occurring in the first subsector… and you want to become an internet or software analyst? Have you spoken to an internet or software analyst in the last six months? They’re miserable. The only reason to pursue becoming a software analyst right now is sunk cost fallacy because you’ve been studying the sector for a long time.
semis analysts were miserable for a decade until 2022. its all cyclical
Right. But if you decide to be an analyst for what could be a defining technology of the next decade, you can make a ton of money. If you decide to be a software analyst right now you’re knife fighting some consumption shitco print like CFLT with minimal long term revisions upside to bail you out
Just ride the AI stories man think of it as a tailwind and headwind depending on business idios
Semis + moats in consumer internet + SW that won't get destroyed
Pick stocks that go up and sell those that go down??? How the fuck did you come up with this tell me more!
comments like this are why the industry is dying. you will be replaced by AI soon
semis are up +30
software is down -15
that's almost a 50 point spread
you can't ignore that r****d, it's the difference between making and losing money
consumer internet is on deck
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