The Narrative Says AI Will Destroy Software Companies. Patient Investors Know Better.

What the Luddites, the ATM, and Napster teach long-term investors

The headlines are loud. The record is louder.

The narrative has decided that AI will devastate software companies, their workforces, and by extension, your portfolio. CBS News, CNBC, and Harvard Business Review have all written the obituary.

Nearly 55,000 U.S. layoffs are attributed to AI in 2025 alone, and here’s a twist worth noting: many of those layoffs are being driven not by AI’s actual performance, but by companies anticipating its potential. The tone is equal parts alarm and inevitability, as if the outcome is predestined.

Maybe. But certainty has a habit of making itself look foolish.

The Luddites were right about the pain

In the English textile towns of Nottinghamshire, Yorkshire, and Lancashire, between 1811 and 1816, a group of skilled weavers and textile workers took matters into their own hands. They called themselves Luddites, after Ned Ludd, a young apprentice who was rumored to have wrecked a textile machine in a fit of rage back in 1779. There’s no evidence Ludd actually existed, but just like Robin Hood, he became the mythical leader of the movement.

The protesters claimed to be following orders from “General Ludd,” and they smashed power looms across the countryside to save their wages and their way of life.

They weren’t wrong about the short-term pain. The machines were taking their jobs, their wages, and their dignity. The British government responded by making machine-breaking a capital offense. Seventeen men were executed. The movement was crushed.

And yet. Over the following decades, power looms didn’t shrink the textile workforce. They expanded it. Lower costs drove demand, created factories, and built cities. In the decades that followed, those cities created entirely new categories of work that no one had imagined: railway engineers, telegraph operators, and factory managers running workforces of thousands.

The Luddites lost the argument, but it took a full generation for anyone to notice, and by then, most of the original workers were long gone.

The bank tellers didn’t see it coming

Bank teller employment in the United States once peaked at nearly 600,000 jobs. Today, there are roughly half that number, and the Bureau of Labor Statistics projects a further 13% decline by 2034. When ATMs arrived in the 1970s, conventional wisdom was swift and decisive: bank tellers were finished. Why pay a person to do what a machine could do for less? Insightful and absolutely wrong.

As economist James Bessen of Boston University documented, teller employment actually increased as ATM deployment accelerated. ATMs reduced the cost of operating a branch, and banks responded by opening 43% more branches to compete for greater market share. The machine took the routine cash transactions. The human got relationship banking, financial guidance, and the complex problems no ATM could solve.

The real blow came decades later and from an entirely unexpected direction. Mobile banking made the branch visit largely unnecessary, and with it, the teller. Not the ATM. The iPhone.

The technology everyone feared didn’t deliver the predicted outcome. A wholly different technology, arriving thirty years later, reshaped the entire landscape. Nobody standing in front of the first ATM in 1970 saw that coming. Nobody could have.

For the teller laid off in 2015, none of this history paid the rent. The vindication of the long run has never arrived on the schedule of personal hardship.

The internet didn’t kill music. It reinvented it.

In 1999, a nineteen-year-old college dropout named Shawn Fanning built Napster in his dorm room and accidentally declared war on the music industry. Within two years, 80 million users were sharing songs for free. The narrative was immediate and unanimous: the internet had killed the music business. The CD (the industry’s golden goose) was finished. Artists would never be fairly compensated again.

They were right about the disruption and the CDs’ demise. They were completely wrong about the destination.

Streaming didn’t exist yet. Nobody was predicting it. But Spotify launched in 2008, Apple Music followed, and the global recorded music industry grew to $31.7 billion by 2025, more than double its 2014 low of $13 billion.

The labels that survived weren’t the ones that fought the technology hardest. They were the ones who built their business model around the new infrastructure rather than defending the old one.

The narrative of total destruction was as wrong as the certainty behind it. The internet didn’t kill music. It disaggregated it, disrupted it, and ultimately expanded it in ways nobody in Fanning’s dorm room in 1999 could have mapped.

Sound familiar?

The honest tension

Here is where compassion and investing must coexist, because dismissing the disruption as a historical inevitability doesn’t make it hurt less for the people living through it.

AI will displace real people doing real work. A software engineer who spent a decade building a skill set may find that skill set repriced practically overnight. A customer service worker, a junior analyst, a graphic designer, these are not abstractions.

They are people with mortgages, kids, and retirement accounts that depend on income that may look very different in five years. That pain is real, and it deserves more than a shrug dressed up as optimism.

And yet, for patient investors, the evidence offers something more durable than optimism. It offers a pattern. IBM acknowledged that AI absorbed hundreds of human resources tasks while simultaneously increasing hiring in areas requiring critical thinking. Salesforce cut its customer support workforce nearly in half (from 9,000 to 5,000) after deploying AI agents, while demand grew for workers who could build, manage, and refine those agents.

The World Economic Forum projects 170 million new jobs created by 2030, against 92 million displaced. That’s a net gain, though one that won’t land evenly or on anyone’s preferred timeline. The new jobs, the ones nobody sees coming, quietly become the ones everyone eventually takes for granted.

This isn’t the first time history has offered investors a clearer lens than headlines. I explored a similar inflection point in The Hidden History Behind the Market’s 10% Return.

For a deep dive into why AI efficiency is actually increasing the need for human labor, check out this excellent article by Mondayswife and Riko Kardamow.

So what does this mean practically for your FI Portfolio?

First, resist making permanent decisions based on today’s narrative. The specific temptation right now is to wholesale exit software and technology because the headlines say AI will destroy it.

That’s the Luddite error, assuming you know the destination of the disruption when our track record suggests nobody ever does.

Second, not all software companies are alike, and the distinction matters enormously. A firm selling basic automation tools faces a very different AI future than one building the infrastructure AI runs on. Some will be disrupted. Others will be the disruptors. And some, those with proprietary data, deep customer relationships, and durable brand strength, may emerge from this moment more anti-fragile than they entered it.

Painting the entire sector with one brush is exactly the kind of imprecision that leads investors to make bad decisions in both directions.

Third, and least glamorously: stay invested and stay diversified. The investors who held through the electrification of industry, the automation of manufacturing, and the rise of the internet weren’t rewarded because they were lucky or prescient. They were rewarded because they didn’t flinch.

Patience isn’t a passive virtue in investing. It’s the active choice to trust your investing process over the panic.

Farmers have always known that a field stripped of its current crop isn’t a lost field. It’s a field being restored. The workers caught in the fallow period aren’t wrong to feel the loss. But investors with the patience to wait for the next harvest have rarely been disappointed.

This moment is no different. The pattern is consistent, the evidence is long, and the choice — as it has always been — is not to bet on human anxiety, but to bet on human adaptability.

As always, invest often and wisely. Thank you for reading.

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Originally published at www.CosmoDeStefano.com