CITIC Securities: Expect the current painful state of the U.S. software sector to potentially continue for some time

CITIC Securities research reports indicate that the US software sector is currently facing intense selling pressure. Looking back at history, the best and only way to counter skepticism towards technological waves has been through corporate performance, and this AI wave is no exception. Compared to AI startups, traditional software companies have clear advantages in customer resources, delivery services, domain knowledge, and data accumulation. They are also actively responding to potential AI impacts and opportunities through M&A, product, and business model adjustments. Who will ultimately benefit and who will be harmed may remain a topic of ongoing discussion over a long period. However, considering the current overall risk-off environment in the US stock market and the slow pace of short-term performance improvement for software companies, the painful state of the US software sector may persist for some time. From a mid- to long-term perspective, combined with the underlying logic of AI, company valuation levels, and other factors, now is the best window to allocate assets into financially stable, platform-based application software, cybersecurity firms, and foundational software (such as data management and ITOM) providers that continue to benefit from computing infrastructure.