JME Maxwellex-CEO · old-timey consultant
26 FEB 2026/Running the firm

We dodged a bullet in February

Engineering, Architecture & Environment equities dodged a bullet this month. The SaaSpocalypse missed us. Software company stock prices tanked 20-25% in response to new Anthropic Claude capabilities, while Engineering, Architecture & Environment stayed pretty steady (about a 1% drop).

YTD 2026 indexed-to-100 chart comparing SaaS software (IGV ETF, -23.6%), Ares Management (NYSE: ARES, -28.4%), and engineering & environmental consulting (AECOM, Tetra Tech, Jacobs, Stantec, -1.5%). SaaS and Ares track downward together; engineering consulting stays flat. Annotated events: Jan 28 Microsoft drops 10% on Azure growth deceleration. Jan 31 Anthropic launches Cowork tools, SaaS selloff accelerates. Feb 5 Ares Q4 earnings miss despite record $623B AUM. Feb 8 private credit fears resurface, AI pressure on portfolio companies raises contagion risk. Feb 18-20 private credit and geopolitical fears compound, alt managers sell off across the board. Mid-Feb engineering consulting stabilizes — infrastructure demand intact, physical services less exposed to AI disruption.

Our industry could be at risk in the future, though. Harbingers of Ragnarok I'm watching for:

  • A pattern of losing work by increasing margins. This could mean competitors are using AI to reduce their cost base and underbid us.

  • Losing work to small firms we've never heard of. AI-native firms can form quickly and leverage AI for more innovative, cost-competitive bids.

  • More bidders on competitive projects. AI reduces the cost of bidding, so firms can pursue more proposals for the same cost of sales.

Key companies — approximate YTD change. SaaS/Software: Salesforce -26%, ServiceNow -28%, Adobe -27%, Intuit -34%, HubSpot -39%. Ares Management peers: Ares Mgmt -28%, Apollo -18%, Blue Owl -32%, KKR -12%, Blackstone -8%. Engineering & environmental consulting: AECOM -8%, Tetra Tech -12%, Jacobs -5%, Stantec -3%, WSP Global +2%. Why this matters for SLR: Ares is getting squeezed from two sides — their own stock is down 28% on private credit fears and AI portfolio exposure, while simultaneously needing portfolio companies like SLR to grow revenue for the next equity event. Engineering consulting is holding up, but Ares' urgency to prove value creation in their holdings only increases as their public market story deteriorates.