US Software: Themes into Q2Q6 Software Earnings: AI Drives Improvement in Spending; Remain Selective

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US Software: Themes into Q2Q6 Software Earnings: AI Drives Improvement in Spending; Remain Selective

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09 Jul 2026 05:21:14 ET │ 23 pages

US Software

Themes into 2Q26 Software Earnings: AI Drives Improvement in

Spending; Remain Selective

Tyler Radke AC

CITI'S TAKE +1-415-951-1660

Ahead of software earnings and detailed company-specific previews, we tyler.radke@citi.com

are updating our views and top picks. Our CIO Survey, checks with Yitchuin Wong

partners/customers, etc, IT Day and recent industry conferences point to an

improved spending backdrop after a softer Q1. However, we believe yitchuin.wong@citi.com

investors should resist extrapolating recent improvements into a broad- Peter Griffith

based recovery across software. We continue to see spending improvement peter.griffith@citi.com

remaining highly concentrated among a relatively narrow group of

beneficiaries within our software universe, particularly cloud & data Andrew Girard, CFA

infrastructure, and a select group of application vendors with strong AI- andrew.girard@citi.com

driven product cycle. We continue to see consolidation pressure and

heightened ROI scrutiny across many traditional application software

categories. As a result, we remain selective in our positioning and continue

to favor companies most directly levered to enterprise AI adoption and

infrastructure buildout. Our top picks are MDB, SNOW and PLTR.

See Overall Spending Improving QoQ But Consolidation Pressure Remains — Our

conversations at Snowflake Summit, Databricks events, AWS Summits and Cannes

reinforced our view that modern data architecture is foundational for AI deployment

across a variety of industries. At the same time, we continue to hear consolidation