Software will embed AI, HSBC says as valuations sit at ‘historic lows’
HSBC says enterprise software will not be threatened by AI, arguing that AI will be embedded inside platforms and that software valuation levels are at “historic lows, ” even as the sector readies for major expansion.
HSBC frames AI as a component inside enterprise platforms
In a research note titled “Software Will Eat AI, ” HSBC writes that AI will function as a component within enterprise systems rather than replace them. The note states: “Within a full-blown enterprise application, we think AI is destined to be subordinate to the overall software platform. ” HSBC adds that AI’s creative, non-deterministic outputs are passed to the software stack to be processed, stored, checked, formatted, presented, or actionized in a deterministic fashion.
Vibe-coding, embedded agents and the vendor edge
HSBC says enterprise vendors have been doing the “heavy lifting” — designing, vibe-coding and beta-testing embedded agents. The report argues that intelligent agents will be deployed in a targeted way for “domain-specific high-value tasks that are difficult to codify, ” and that these agents can be controlled inside broader platforms to mitigate the technical hurdles of foundation models.
Buy-rated names and the valuation backdrop
HSBC highlights that software valuation levels are at “historic lows” even as the sector is poised to expand massively. The note lists Buy-rated names that the firm views as well placed to integrate AI into enterprise stacks: Oracle (ORCL), Autodesk (ADSK), Akamai (AKAM), Salesforce (CRM), CrowdStrike (CRWD), Alphabet (GOOGL) (GOOG), HP Inc. (HPQ), Intuit (INTU), Microsoft (MSFT), ServiceNow (NOW), Palantir (PLTR), TE Connectivity (TEL) and Zoom Communications (ZM).
What this means for adoption and monetisation
The report says software will remain the primary mechanism for the diffusion of AI across large enterprises, noting that foundation models and vibe-coding are not replacements for core IT platforms. HSBC projects a timing milestone for commercialisation: 2026 is expected to mark a key turning point in monetisation of AI within enterprise software, with vendors positioned to capture the initial value.
HSBC’s central claim is concrete: AI will be domesticated within application stacks embedded agents, and enterprise software vendors are already embedding distilled intelligent agents into platforms — a sequence the firm expects to convert into monetisation starting in 2026.
The next confirmed milestone HSBC highlights is 2026 as the expected kickoff for monetisation of AI within enterprise software.
