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3、page 11.European Software&PaymentsWhat if.the AI disruptionsnarrative continues to impact thesector?The AI debates centres on seat contraction,new entrants,andSEO disruption,but we see most our coverage wellpositioned.However,the key concern is a narrative-drivensector derating,where we see some rea

4、sons to be positive.Inthis context,we like AMS and SAP,but see Sage as mostexposed.What is the AI narrative and what are the key concerns?:Since we published Food for thoughtfollowing todays AI-related share price weakness(12/08/25),our discussions suggest thatinvestors main fundamental concerns are

5、 1)AI-driven seat contractions,2)AI-enabled newentrants and 3)distribution challenges due to SEO(search engine optimisation)disruption.Weoutline our views on these below,before addressing the key concern:a narrative-driven sectorderating.1)Seat contraction-not an issue if efficiency gains can be mon

6、etised:We think it isimportant to consider whether an AI-driven reduction in the number of software seats is causedby the software vendors own AI solutions or external ones.We think the software vendor will beable to monetise the former to more than offset the reduction in seats,while there is littl