CITIC Securities: FDE is expected to push agents into the production environment to drive a hierarchical upward trend in the software industry

The Zhitong Finance App learned that CITIC Securities released a research report saying that the CY2026Q2 financial report shows that current demand in the US stock software sector continues to improve: application software performance and orders remain resilient, thereby effectively alleviating concerns about “AI devouring software”; the basic software and information security sector has bright guidelines, indicating that industry demand continues to be high. Looking forward to the future, the core constraint of enterprise agent commercialization is shifting from model capability to production deployment. FDE can push agents from pilot to real business processes by solving problems such as proprietary data, business semantics, system integration, and authority governance. With the gradual implementation of the FDE layout, basic software and information security are expected to take the lead in benefiting from the growth in data calls, network traffic and security requirements. The growth rate of application software AI revenue and overall revenue is expected to gradually improve from CY2026Q4 to CY2027Q1, and the valuation and pricing logic is also expected to improve significantly based on existing pessimistic expectations.

Q2 performance: Demand for application software has picked up, and basic software and information security guidelines are outstanding

According to LSEG (including consistent expectations) and company announcements, out of the 35 sample software companies counted by CITIC Securities, the average operating income of 16 application software, 10 basic software companies, and 9 information security vendors CY2026Q2 was about 2.0%, 3.3%, and 3.2% higher than expected, respectively. The average non-GAAP operating profit was about 10.7%, 20.7%, and 10.2% higher than expected, respectively. Revenue growth and cost efficiency improvements jointly supported profit performance. Looking ahead, according to LSEG (including consistent expectations) and various company announcements, the CY2026Q3 revenue guidelines for the three sectors were on average about 0.3% lower than expected, about 1.6% higher, and 1.9% higher, respectively; the average annual revenue guidance for basic software and information security vendors CY2026 was about 1.1% and 1.7% higher than expected, respectively.

CITIC Securities believes that application software customer renewals, inventory expansion, and new product sales have remained resilient, but customer decisions and order conversion have not yet been fully accelerated; basic software benefits from AI training and reasoning, data platforms, and development, operation and maintenance requirements, and information security benefits from cyber threat upgrades, cloudization, and platform integration, and the popularity and performance visibility are relatively high.

IT demand and AI monetization: orders continue to grow, and AI products gradually move from trial to payment and production deployment

According to various company announcements, the CRPO at the end of Salesforce and Workday CY2026q2 both increased about 14% year over year, Snowflake and MongoDB's CRPO increased by about 40% and 73% year over year respectively, and CrowdStrike and Palo Alto Networks' RPO increased by about 49% and 34% year over year, respectively, indicating that the company's investment in core applications, data platforms, and information security is still resilient.

Judging from the results conference, 13 of the 14 key application software vendors believe that demand is steady or strong, and some customers have already formed independent AI budgets. The overall monetization of application software AI is still in its early stages. Of the 14 sample companies, 6 have achieved certain results, and 7 are in the early stages; the monetization model has also gradually extended from product packaging to points, token consumption, excess usage, and results-oriented pricing.

CITIC Securities believes that the realization of application software revenue still depends on production deployment, payment conversion, and usage growth; basic software and information security are closer to production workloads such as data calls, network traffic, and security protection, and are expected to benefit first.

Industry outlook: FDE is expected to push agents into the production environment and drive a hierarchical upward trend in the software industry

Enterprise agent implementation requires solving problems such as proprietary data access, business semantics, system integration, identity authority, and runtime governance. Traditional SaaS delivery models that focus on standard products and configured implementation are difficult to fully adapt. FDE takes customer business requirements as a starting point, embeds engineers into customer teams to complete scene identification, data access, application construction, and production deployment, and settles common experiences into standard components and industry solutions. Referring to Palantir's delivery experience, the project cycle has been shortened from about 9 months around 2021 to about 2 months now. Considering that most application software vendors began to advance the FDE layout in 2026Q2, CITIC Securities expects the relevant AI load to gradually be implemented from CY2026Q4 to 2027Q1. Requirements for basic software and information security may improve earlier, and whether the growth rate of application software revenue can reach an inflection point still depends on FDE delivery efficiency, customer adoption, and AI consumption scale.