As the broader market consolidates on Tuesday (July 30), with major A-share indices all trading in negative territory, the Software Development ETF (159036) has bucked the trend, climbing up to 2.1% intraday and currently up 1.44%, approaching a four-day winning streak from its lows. Among its component stocks, Pulian Software hit the 20% daily limit, Yunnan Nantian Electronics Information Co.,Ltd. and Shuiyou Technology both surged by the 10% daily limit, Foxit Software jumped over 12%, and Formosa Plastics, Guozi Software, and Hehe Information also saw strong gains.

On the news front, Tencent's WorkBuddy officially launched on the HarmonyOS app marketplace on July 28, becoming the first native desktop office AI agent on the platform. This single product launch is just a microcosm of the broader industry trend. Currently, domestic AI applications have moved beyond a singular focus on model parameter competition. Both major tech firms and vertical startups are competing on the same stage, with consumer-facing mass tools and enterprise-level industry agents accelerating simultaneously. A full-scale "Warring States Period" of AI applications has begun.

ByteDance is betting on a pure AI-native super entry point, with its Doubao leading the industry at 382 million MAU. Tencent is building a differentiated moat through a dual-track strategy: one, leveraging WorkBuddy to seize the PC desktop office entry point, and two, conducting grayscale testing of an AI assistant, Xiaowei, integrated into WeChat. This transforms the vast WeChat mini-program ecosystem into a Skill framework that can be called by AI agents, creating a dual closed loop of "office productivity + life services." Alibaba is building a complete AI office matrix with its Tongyi Qianwen model and DingTalk's collaboration with Tongyi Lingma. Ant Group is anchoring on the universal health needs of the masses with its AI product Afu, while strategically investing in Mint Health to supplement dietary and weight management data.

Global competition is also intensifying. Google's Gemini is expanding through the Android ecosystem, while Microsoft and Nvidia are jointly calling for open-weight models. The open ecosystem and closed-source super applications are now in a stalemate, with both domestic and international markets characterized by a fragmented competitive landscape without a clear leader. The software industry is in an overall upward cycle, but it's uncertain which sub-sector or individual stocks will outperform. Rather than betting on a single area, the Software Development ETF (159036) offers a more comprehensive and balanced approach by tracking an index that covers the entire industry with 107 component stocks, potentially capturing the industry's beta returns.

Institutions generally believe that three sub-sectors within the AI application space offer medium-to-long-term value: AI Office Agents, Real-time Interactive AIGC, and Vertical Industry Agents.

For AI Office Agents, policy clearly encourages the evolution of AI towards autonomous decision-making agents. The demand for digital transformation from SMEs is being released in a concentrated manner. Dozens of desktop office agents are already competing in the market, with Tencent WorkBuddy, Alibaba Qianwen Office, and ByteDance Trae (AI IDE) forming the first tier. The subscription business model is market-validated, with pricing systems at 98 RMB/month and 198 RMB/month gaining widespread acceptance. Simultaneously, the expansion of the multi-terminal ecosystem, including Xinchuang and HarmonyOS, combined with the release of demand from the financial and government sectors, is enabling related companies to improve performance through customized industry agents. This sector offers the highest profit certainty in the industry.

For Real-time Interactive AIGC, AI content is shifting from static, one-time generation to streaming, continuous interaction. Three sub-sectors鈥擠igital Humans, AI Short Dramas, and Interactive Games鈥攁re experiencing explosive growth. Institutions estimate that the domestic AIGC market size could reach 166.5 billion RMB by 2026, with the interactive content track growing faster than the rest of the industry chain. Three monetization paths鈥擠irect-to-consumer subscriptions, asset points, and B2B APIs鈥攁re maturing simultaneously.

For Vertical Industry Agents, as the underlying industry paradigm shifts from the mobile internet's "attention economy" to AI's "Token economy," vertical industry agents, which are tied to proprietary industry data, naturally possess differentiated barriers. Concurrently, domestic large model iterations are accelerating, and the underlying computing power is becoming increasingly self-controllable. The demand for private deployment in government and enterprise sectors is strong, and the gross margins of vertical agents are generally higher than those of general-purpose dialogue products, making them a key focus for institutional investment.

In the long term, the AI application landscape is unlikely to replicate the "winner-takes-all" pattern of the mobile internet. General-purpose super AI tools, vertical industry agents, and real-time interactive content platforms will coexist in a stratified manner for a long time. Upstream computing costs are continuously optimizing, policies are increasingly supporting AI industry deployment, and demand from both downstream government/enterprise and consumer sectors is expanding. Data shows that the component stocks of the Software Development ETF (159036) include companies in AI+Finance, AI+Healthcare, AI+Office, AI+Education, AI+Information Security, and AI+Government Affairs sectors. As of July 15, the weight of AI application concept stocks was 46.56%.

After hardware, the spring of software. Looking at past technological revolutions, profits have always flowed from hardware to applications. The end of hardware's dominance may signal the beginning of software's golden age. Earlier this year, the narrative of "large models devouring software" caused a significant valuation discount for the AI application sector compared to the computing and model layers. The software development sector has become a relatively "low water level" area within the AI industry chain, offering high valuation cost-effectiveness and a strong safety margin. Driven by AI empowerment and Xinchuang initiatives, the software development sector is poised to rise.

The Software Development Index tracked by the Software Development ETF (159036) encompasses popular concepts. As of July 15, the weight of component stocks in AI Application, Cloud Computing, Xinchuang Industry, Fintech, Cybersecurity, and HarmonyOS Ecosystem concepts was 46.56%, 41.02%, 39.26%, 33.08%, 15.05%, and 14.47%, respectively.

Regarding ETF fees: The Software Development ETF does not charge a sales service fee. When investors subscribe for or redeem fund shares, the subscription/redemption agent 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 (159036) passively tracks the CSI All Share Software Development Index. The index base date is 2021.12.31, and its release date is 2023.3.29. The fund is issued and managed by Hwabao Fund. The agent institution does not bear the investment and payment responsibilities of the product. Investors should carefully read the fund's legal documents, including the Fund Contract, Prospectus, and Fund Product Information Summary, to understand the fund's risk-return characteristics and choose a product that matches their own risk tolerance. The fund manager's assessed risk rating for this fund is R3-Medium Risk, suitable for investors with a balanced profile (C3) and above. Please refer to the sales institution for an appropriate suitability assessment. Sales institutions (including the fund manager's direct sales and other sales institutions) will conduct risk assessments on this fund according to relevant laws and regulations. Investors should promptly refer to the suitability opinions issued by the sales institution and base their decisions on the matching results. The suitability opinions of different sales institutions may not be consistent, and the risk rating of the fund product issued by the fund sales institution shall not be lower than the risk rating assessment made by the fund manager. The fund's risk-return characteristics in the contract and the fund's risk rating may differ due to different consideration factors. Investors should understand the fund's risk and return profile and carefully choose fund products based on their own investment objectives, time horizon, investment experience, and risk tolerance, bearing the risks themselves. The registration of this fund by the China Securities Regulatory Commission does not imply a substantive judgment or guarantee of its investment value, market prospects, or returns. Past performance and net asset value of the fund do not predict future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of this fund's performance. Fund investment carries risks, invest with caution!