LatAm Tech: 1Q26 recap: Early benefits of AI, but still a long way to go

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LatAm Tech: 1Q26 recap: Early benefits of AI, but still a long way to go

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LatAm Tech

1Q26 recap: Early benefits of AI, but still a

long way to go

Price Objective Change

Positive 1Q driven by strong margins; AI concerns remain 21 May 2026

LatAm software’s 1Q26 results were broadly positive. Revenue trends remained in line Equity

with 2025, with TOTVS standing out positively while VTEX was softer. Margins were a Latin America

highlight, with positive surprises across the sector, driven by operating leverage and Telecom, Media and Tech

early AI-related efficiencies. AI remains the central debate across software, with Lucca R Brendim >>

increasing concerns around software companies’ long-term growth sustainability, though Research Analyst

we are yet to see impacts on results. Despite the recent de-rating, we remain Merrill+55 11Lynch2188 (Brazil)4100

constructive on LatAm Software, as near-term fundamentals are still solid and margin lucca.brendim@bofa.com

upside should support EPS momentum and multiples compression. We update our Rogerio Araujo >>

Research Analyst

estimates for LWSA with 1Q results and a more conservative AI outlook for revenues Merrill Lynch (Brazil)

(lower long-term growth), cutting our PO from R$7 to R$6. We update our estimates for +55 11 2188 4255

rogerio.araujo@bofa.com

TOTVS to reflect 1Q results and weaker top-line in RD/Techfin/Linx, reducing our PO

from R$47 to R$44. We reiterate our Buy ratings on TOTVS, VTEX and LWSA.

TaaS: Task as a service

Different AI strategies; VTEX undergoes broader changes

AI is the central topic of discussion in tech, but each company is adopting a different

strategy. VTEX is taking a more transformational approach, framing AI as a reinvention