Total profits in the software industry increased by 6.6% year-over-year. How can sector ETFs connect to the real-world 'neural network'?

On January 7, 2026, eight departments including the Ministry of Industry and Information Technology issued the 'Special Action Implementation Opinions on Artificial Intelligence + Manufacturing,' proposing the creation of a full lifecycle intelligent toolchain product system for software, accelerating the intelligent upgrade of traditional software and services, fostering specialized intelligent solutions for vertical domains, and building high-quality datasets for the software industry.

As foundational large models continue to iterate and computing centers are built, market demand for the commercialization of AI applications is significantly increasing. Amid the trend of AI shifting from 'computing power construction' to 'software scaling,' can leading software companies with core algorithm capabilities and industry data achieve both earnings and valuation recovery?

First, total profits in the software industry increased by 6.6% year-over-year. How can software ETFs connect to the real-world 'neural network'?

Within the AI industry chain, the software sector mainly operates in the midstream technology layer and downstream application layer, playing a key role in providing core technology support and enabling practical applications. Specifically, in the midstream technology layer, the software industry primarily provides AI frameworks, development platforms, and algorithm models, which are the foundation for AI application development. In the downstream application layer, the software industry drives the implementation of AI applications by integrating AI technologies with various industries.

The deepened implementation of the 'Artificial Intelligence+' initiative will unlock substantial market potential. As AI technology continues to expand and mature across various industries, intelligent projects in key sectors such as finance, manufacturing, energy, and government will move from pilot demonstrations to large-scale deployment, driving sustained demand for AI software, solutions, and related services.

According to data from the Ministry of Industry and Information Technology, in the first eleven months prior to 2025, China's software and information technology service industry showed positive performance, generating revenue of 13.9777 trillion yuan, a year-on-year increase of 13.3%; total profits in the software industry reached 1.6954 trillion yuan, up 6.6% year-on-year; software business exports amounted to $56.89 billion, growing by 8.1% year-on-year, with positive growth maintained for nine consecutive months.

It is projected that by 2026, software business revenue will maintain an annual growth rate of over 10%, with artificial intelligence applications, independent innovation in information technology applications, and the integration of real and digital sectors becoming the main sources of incremental growth.

In terms of secondary market performance, as of January 29, 2026, according to Shenwan Industry classification, Shenwan Computer rose by 10.34% in the past month, while Shenwan Software Development increased by 11.76% during the same period.

How do leading companies in the industry 'concentrate' on sharing the benefits?

It should be noted that the CSI Software Services Index selects 30 listed company securities involved in software development and software services as index samples to reflect the overall performance of securities from companies in the software services industry.

For sample selection, the CSI Software Services Index screens listed company securities in the software development and information technology services industries based on two criteria: average daily trading volume and average daily market capitalization, thereby identifying leading companies in the software sector.

As of January 29, 2026, the top ten components include iFlytek, Kingsoft Office, Tonghuashun, Hundsun Technologies, Compass, Sangfor Technologies, Qihoo 360, Talkweb Information, Runhe Software, and Softtone Power. The combined weight of the top ten components is 59.95%, with iFlytek, Kingsoft Office, and Tonghuashun being the top three weights at 13.57%, 8.21%, and 7.71%, respectively, summing up to nearly 30%.

Thus, strong performance by high-weight stocks forms the cornerstone of index growth. According to earnings forecasts, iFlytek’s net profit attributable to shareholders for 2025 is expected to grow by 40%-70% year-on-year, while Tonghuashun expects growth of 50%-80%. As of January 29, 2026, the CSI Software Services Index gained 13.84% over the past month and 27.5% over the past year.

Aside from the CSI Software Services Index, the CSI Internet Index also provides exposure to the software industry.

The CSI Internet Index selects 50 listed company securities involved in internet hardware equipment, cloud computing and data center infrastructure, intelligent application software for various industries, internet operations, and internet content services as index samples. From the perspective of industrial chain layout, it covers not only downstream software but also upstream artificial intelligence hardware, aligning closely with the recently proposed 'AI + Manufacturing' initiative.

Overall, with the market's increasing demand for the commercialization of AI applications, software, as the foundation for AI application development, is likely to see a further rise in industry prosperity.

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