China Software: Aug revenue growth down to 6.5% YoY; AI native products in expansion to drive spending

Goldman Sachs China Software industry monthly tracker. In August 2026, China software industry revenue growth slowed YoY (below July), driving higher cumulative revenue growth year-to-date, while overall net margin was roughly flat versus July. By segment, semiconductor design, IT services, and cloud computing and big data outperformed, with IT services remaining the key revenue contributor, while security software revenue declined; overseas/export revenue share edged down. Looking into 2H, the firm expects sequential improvement in revenue on better seasonality, while clients' software spending remains broadly under pressure with budgets shifting toward AI foundational and customized AI model projects. Monetization and use cases of AI agents are accelerating, and enterprises' willingness to adopt AI is rising, with strong client interest in HR products such as AI interview and AI E-learning. Improving AI features and progress in foundational models for text/image/video content generat