Software development stocks mounted a collective recovery on Friday (August 28), fueled by robust earnings reports from US tech behemoths that reignited confidence in AI applications, alongside heightened activity in the cybersecurity sector.
Hunan Kylinsec Technology Co.,Ltd. and Digiwin Software saw their shares hit the 20% daily limit, while Topsec, Tax友, and Joyous Software all reached the 10% daily limit. Foxit Software and 360 briefly touched their intraday limits before closing up 7.06% and 6.65%, respectively. The software development ETF Huabao (159036), which tracks an index comprising 107 stocks in the sector, saw its benchmark index surge over 3% in early trading before closing up 0.69%.
On the news front, international heavyweights including Salesforce and CrowdStrike disclosed better-than-expected financial results, significantly easing market concerns that AI might disrupt the traditional software industry. This development spurred a global rally in AI software stocks, opening a window for valuation repair in the A-share software development sector.
Looking at specific AI application segments, AI-powered office tools are emerging as the next definitive direction for token consumption, following in the footsteps of code generation. Overseas, Anthropic has taken the lead with its Claude Cowork offering, while OpenAI has integrated Codex with ChatGPT to expand into office scenarios. Domestically, major players such as Tencent, Alibaba, and DeepSeek are progressively advancing AI agent products like WorkBuddy. The potential of AI office applications is substantial, with the capacity to bring AI into the mainstream consumer market, positioning office as a new platform-level product and traffic gateway for the B-end segment.
China Securities Co., Ltd. notes that the investment logic for AI is transitioning from a race of model capabilities and capital expenditure to commercial validation. The capability gap for domestic models in Coding and Agent tasks is narrowing rapidly, and the application flywheel's closed loop is outperforming expectations. The firm recommends focusing on B-end AI application vendors with strong capabilities in scenario development, data management, and enterprise delivery.
As AI agents develop at breakneck speed, cybersecurity has garnered increased market attention. The strong growth results recently disclosed by US cybersecurity leader CrowdStrike further validate the logic that "AI threats are driving up security spending." On August 27, OpenAI released an open letter titled "A Call for Collective Action on Cyber Defense," co-signed by over 100 organizations including Anthropic, AWS, Google, and Microsoft. The letter warns that the window for strengthening cyber defenses is limited and urges all organizations to elevate network defense to the highest leadership priority.
Zheshang Securities believes that AI will not fully replace cybersecurity vendors but will instead amplify the essential demand for security protection. Leading enterprises with full-stack AI security capabilities are seeing their technical moats continuously widen. Overseas AI leaders are accelerating the development of specialized tools and models for cybersecurity scenarios, while AI-powered automated cyberattack methods are iterating at a faster pace. This is forcing government and enterprise organizations to persistently increase security procurement budgets. Domestic cybersecurity companies with AI security products and full-stack protection capabilities will benefit from the dual tailwinds of incremental AI security demand and domestic substitution initiatives.
From a valuation perspective, as of August 27, the price-to-earnings ratio (TTM) of the software development index stood at 164.78 times, lower than in 78% of the time periods since its listing. This presents a relatively compelling valuation with a notable safety margin.
Historically, across technological revolutions, profits have consistently flowed from hardware to applications. Earlier this year, narratives around "large models swallowing software" led to a clear valuation discount in the AI application sector, making the software development sector a "valuation trough" within the AI industry chain. With the software industry currently in an upward cycle, though it remains uncertain which specific sub-sector or individual stock will outperform, investors could consider a broad industry approach through the software development ETF Huabao (159036). This ETF covers 107 constituent stocks, providing comprehensive exposure to AI+finance, AI+healthcare, AI+office, AI+education, AI+cybersecurity, and AI+government services. Driven by AI empowerment and domestic substitution initiatives, the software development sector is poised for significant growth.
The software development index, tracked by the ETF, encompasses popular themes. As of the end of July, the weightings for AI applications, cloud computing, domestic substitution industries, fintech, cybersecurity, and HarmonyOS ecosystem concepts stood at 47.88%, 42.77%, 42.43%, 32.73%, 16.36%, and 14.44%, respectively.
Regarding fund fees, the software development ETF Huabao does not charge sales service fees. When investors subscribe for or redeem fund shares, the agency broker may charge a commission of up to 0.3%. On-exchange trading fees are subject to the actual charges of the securities company.
Risk Disclosure: The software development ETF Huabao passively tracks the CSI All-Share Software Development Index, with a base date of December 31, 2021, and a release date of March 29, 2023. The fund is issued and managed by Huabao Fund, and distribution institutions do not bear responsibility for the fund's investment performance or redemption. Investors should carefully review fund legal documents such as the Fund Contract, Prospectus, and Fund Product Information Summary to understand the fund's risk-return characteristics and select products that match their own risk tolerance. The fund manager assesses the fund's risk level as R3-Medium Risk, suitable for balanced (C3) and above investors. Please refer to the sales institution for the final suitability assessment. Sales institutions (including the fund manager's direct sales and other distribution institutions) evaluate the fund's risk in accordance with relevant laws and regulations. Investors should promptly consult the suitability opinions issued by sales institutions and defer to their matching results. Suitability opinions from different sales institutions may not be consistent, and the fund product risk level ratings issued by fund distribution institutions should not be lower than those set by the fund manager. Discrepancies may exist between the risk-return characteristics stated in the fund contract and the fund's risk level due to different considerations. Investors should understand the fund's risk and return profile, carefully choose fund products based on their own investment objectives, horizon, experience, and risk tolerance, and bear the risks themselves. The registration of this fund by the China Securities Regulatory Commission does not constitute a substantive judgment or guarantee of its investment value, market prospects, or returns. Past performance of the fund and its net value levels do not indicate future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Funds carry risks, so invest with caution!
MACD golden cross signals are forming, and these stocks are showing promising upward momentum!
Comments