Strategic Alternatives

Software sentiment has shifted significantly as investors reassess the impact of AI across the sector. In this episode, Matt Hedberg and Rishi Jaluria discuss opportunities emerging across cybersecurity, data and infrastructure, the evolution of software business models, and where value may accrue across the software stack. They also explore cyber resilience and the economics of buy-versus-build decisions.Key PointsSoftware sentiment has improved as investors increasingly view AI as an opportunity to expand software capabilities rather than displace software altogether.Companies with strong track records of innovation may be best positioned to benefit as AI reshapes competitive dynamics across software.Rising AI-related security incidents are reinforcing the need for cyber resilience and security modernization.Software moats remain intact, while outcome-based pricing is emerging as an important area of business model evolution.DIY software strategies do not always reduce costs once maintenance, security and opportunity costs are taken into account.How has software sentiment evolved this year? [00:55]Matt Hedberg discusses the recovery in software sentiment, changing investor perceptions of AI, and the debate around the future of traditional SaaS applications.What determines AI winners and losers? [04:58]Rishi Jaluria explores why innovation remains the most important moat, the role of M&A as outsourced R&D, and how software business models may evolve.What are the cybersecurity implications of recent AI incidents? [07:25]The discussion examines rising AI-driven cyber threats, increasing demand for security modernization, and the implications for cybersecurity vendors.What stood out from the software and AI bus tour? [09:55]Insights from meetings with software companies, investors and private companies, including software moats, incumbent advantages, outcome-based pricing and the limits of vibe coding.What does the DIY framework suggest about buy versus build? [12:36]Matt Hedberg and Rishi Jaluria discuss the hidden costs of internally developed software and the trade-offs organizations face when evaluating DIY approaches.Listen and subscribe to Strategic Alternatives on Apple, Spotify or wherever you get your podcasts. To learn more about software and AI trends and RBC Imagine research, contact your RBC Capital Markets representative or visit rbccm.com/strategicalternatives.

The UK is acknowledged as a renewables leader. Heavy transmission investment will help it enhance energy security alongside clean power. But when it comes to the third point of the energy trilemma, affordability, there’s a problem: the country’s electricity demand is just too low. Chris Stark, the UK government’s Head of Mission Control for Clean Power 2030, sets out its strategy in conversation at RBC Capital Markets’ Energy Transition Conference.What is the Clean Power 2030 mission? [00:51]Chris Stark discusses his background as CEO of the Climate Change Committee, his appointment when Labour won the 2024 election, and the goal of reaching a mostly clean power system by 2030 through investment in clean generation, grids and storage.How does electrification transform the energy system? [02:27]Chris explains how doubling the power system will halve overall energy use through the efficiency of electric vehicles and heat pumps, while greater domestic generation boosts energy security.What is the biggest grid build since the 1960s? [03:58]The discussion covers the largest transmission build in decades, turning the grid inside out from coal to wind, and the government consenting clean energy projects faster than any previous administration.How is the government reforming grid connections? [04:56]Chris details the extension of Contracts for Difference from 15 to 20 years and the radical reordering of the connections queue to prioritize strategically aligned and commercially ready projects.Can the energy trilemma be solved? [05:44]The conversation examines the tension between capital investment, delivery speed and consumer costs, the legacy of levies on electricity bills, and the challenge of moving policy costs onto the exchequer.How can EVs lower electricity bills? [07:20]Chris outlines how scaling EVs from 3 million to 30 million vehicles, alongside heat pumps, could cut the unit cost of electricity by up to 25% by spreading fixed costs over greater demand.What role do data centres and flexibility play? [08:19]The discussion explores smart demand from data centres located where spare electrons would otherwise be constrained off, the benefits of a flexible power system, and targeted rebates for heavy industry.What about CCS and hydrogen? [09:49]Chris addresses the remaining 20–30% of decarbonization that electrification cannot reach, the UK’s advantage in CCS through depleted oil and gas wells, and the reality check on costs for carbon capture and hydrogen projects.What's the risk to investors from political change? [10:53]Chris explains why he does not expect a change of agenda with a new Prime Minister, how fixed-revenue contracts with an independent counterparty protect investors, and why the cost of finance will determine the future cost of energy.Listen and subscribe to Strategic Alternatives on Apple, Spotify or wherever you get your podcasts. To learn more about the UK energy transition and RBC Capital Markets research, contact your RBC Capital Markets representative or visit rbccm.com/strategicalternatives.

Nik Modi, Global Co-Head of Consumer Research at RBC Capital Markets, explores a major reset for consumer staples. They discuss the rise of a K-shaped economy, shifting demand between premium and value, decision fatigue, and the growing power of digital platforms and creators. They also examine how brands can rethink portfolios, capabilities, resilience, and cultural relevance for a fast-changing marketplace.

Francesco Starace, energy executive, nuclear engineer, investor, and former Enel CEO, explores why technology may outpace geopolitics and politics in transforming energy. He discusses nuclear’s uncertain future, renewables’ growing need for stronger grids and storage, the coming electricity demand shock from electrification, and how investors can navigate long-term infrastructure opportunities.

Asif Ahsan, RBC Capital Markets’ technology M&A Managing Director, and Matt Thomas, its technology investment banking Managing Director, explore fintech’s next big opportunities. They discuss payments consolidation, agentic commerce, stablecoins, AI-resistant data and hardware, financial software, market volatility, digital trading platforms, crypto, and tokenization.

Asif Ahsan, an RBC M&A specialist in fintech, and Matt Thomas, an RBC technology investment banker focused on financial software, explore where investors see fintech’s next winners. They discuss AI-driven growth, retention, durable valuations, and why regulation and embedded workflows offer resilience. Wealthtech and insurtech emerge as M&A hotspots, while capital-markets software faces mounting AI competition.

Kartik Kaushik, head of U.S. cash management at RBC Clear, and Raja Khanna, head of U.S. corporate banking at RBC, discuss how AI infrastructure spending and M&A are driving demand for financing. They talk about evolving lending landscapes, capital structure choices, and treasury’s shift toward strategic cash visibility, real-time controls and integrated banking solutions.

Tom Narayan, Lead Equity Analyst in Global Autos at RBC Capital Markets, breaks down China’s EV rise. He explores how battery supply chains and scale built an advantage. He tracks Chinese OEMs exporting and localizing in Europe. He assesses implications for Western automakers, suppliers, and the hurdles to entering the U.S. market.

Amid soaring power demand and energy security concerns, will the market start to place more value on conventional oil and gas production again? Ben Rodgers believes that it will, and that APA Corporation is well placed to benefit when the moment comes. In this episode of Innovators and Ideas, he sets out the company’s strategy across diverse territories and commodities.Key Points• Oil and gas group APA Corporation has continued to explore as well as produce.• Producing oil and gas, and working across continents, offers diversified exposure.• The company has brought in Total for a joint venture in Suriname.• A major restructuring was designed to advance APA’s objective of being a cost leader.

Maurice Choy, Canadian energy infrastructure analyst focused on midstream and exports, and Robert Kwan, head of global power, utilities & infrastructure research, discuss rising global power demand and energy security. They cover geopolitics driving an all‑of‑the‑above approach, affordability pressures from higher prices, hyperscalers as huge electricity consumers, resilience investments, Canada’s export opportunities, and synthetic tech advances.