The AI application and software sectors showed notable strength against broader market trends today (June 1st). The Huabao Big Data ETF (516700), which covers popular themes like computing power leasing and AI applications, saw its intraday price surge up to 3.53%, closing with a gain of 1.35%. The fund has experienced net capital inflows for four consecutive trading sessions prior, totaling 84.8 million yuan, reflecting investor optimism and active positioning in the big data industry's future prospects.
Among its constituent stocks, Yonyou Network and Shuiyou Co. Ltd. surged by the daily limit, Dingjie Digital Intelligence led gains with over 14%, Easysub and Sangfor Technologies rose more than 9%, with China Software and CETC Digital following suit. In total, 26 stocks within the ETF gained over 2%.
Key Catalysts for the Sector's Strength
The outperformance in AI applications and software can be attributed to three primary factors.
Firstly, earnings from major US software companies like Snowflake, MongoDB, and Salesforce significantly exceeded expectations in May. This strong performance has debunked the previously prevalent market narrative fearing "AI disruption" of the software sector. Investors are now reassessing the value proposition of software companies in the AI era. The subsequent rebound of over 21% in the US software IGV index is creating a spillover effect, influencing capital reallocation towards A-share software stocks.
Secondly, the industry's business model is undergoing a transformation, potentially unlocking new revenue streams. The AI business model is evolving from a pure SaaS subscription model to a dual-track system combining "subscription + token consumption." As AI agents proliferate, token consumption is expected to grow exponentially, raising the industry's revenue potential. Concurrently, the cost of token inference has reportedly plummeted by around 90%, drastically lowering the barrier to AI application adoption. This cost efficiency is expected to help software companies enter a high-growth phase of scaled deployment by 2026.
Thirdly, A-share software stocks appear undervalued, potentially setting the stage for a valuation re-rating. As of the end of May, the price-to-earnings ratio (PE TTM) of the CSI Data Index stood at 107.30, below its historical median of 110.80 and at approximately the 46.43rd percentile over the past three years, suggesting attractive valuation and a relatively high margin of safety.
Institutional analysis aligns with this positive outlook. Guojin Securities has indicated that 2026 will be a pivotal year for AI applications transitioning from "technical validation" to "commercial promotion." They highlight the role of software in defining computing power, allowing companies to profit akin to "selling shovels during a gold rush." The powerful semantic understanding and data analysis capabilities of large language models are beginning to yield commercial dividends. Similarly, Morgan Stanley posits that a catch-up rally in the application layer could emerge as the next major market theme.
Focus on Data Security and Technological Self-Reliance
The Huabao Big Data ETF (516700), which is deeply tied to domestic computing power (IDC, servers) and AI application sectors, passively tracks the CSI Big Data Industry Index. This index covers the entire data technology lifecycle, encompassing big data storage, production, analysis, operation platforms, and application fields, providing a comprehensive reflection of China's big data industry development. Its top holdings include industry leaders such as Sugon, iFLYTEK, Unisplendour, Inspur Information, China Great Wall, and China Software.
The ETF's underlying index is heavily weighted towards several hot investment themes. As of the end of May, the combined weight of its constituents associated with cloud computing, IDC (computing power leasing), computing power, and AI application concepts was approximately 88.41%, 44.80%, 43.97%, and 27.84%, respectively.
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