A prominent short seller says the AI boom is starting to expose a structural weakness inside parts of enterprise software, where growth has long depended on charging customers per employee.
In a Fox Business interview, Andrew Left, founder of Citron Research, says he keeps hearing the same question about the market’s AI enthusiasm, but believes the more immediate issue is what AI does to headcount and the pricing models tied to it.
Left says many of the companies now facing this shift are not low-quality businesses, but established enterprise names that built their revenue engines around per-seat licensing. He points to major software firms as examples of businesses facing pressure as companies use AI to reduce staffing needs.
“When you’re looking at trends, I can’t unhear, ‘Are we in an AI bubble?’ These were great companies. We have companies like Salesforce and Workday, which were awesome companies that right now face a big problem.”
Left says if companies employ fewer people, they need fewer seats, and the pricing model breaks.
“We’re going to have a lot less employees. So paying per seat is a business model. And you see it in the stock prices right now, that their CEOs have to pivot. It is a zombie business model from AI.”
His comments suggest the risk is not only whether AI valuations are overheated, but whether legacy software pricing structures can survive in a world where the core unit of billing, the employee seat, may be shrinking.
At time of publishing, Salesforce (CRM) is worth $266, down about 22% this year, while Workday (WDAY) is valued at $220, an over 15% decrease over the same time frame.
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