Wall Street's panic over artificial intelligence replacing enterprise software is misguided, according to HSBC's latest research report. The investment bank argues 2026 marks a crucial shift from AI infrastructure build-out to actual monetisation through software, positioning established platforms to benefit rather than suffer from the technology's rise.
"Market concerns that AI will replace enterprise software are misplaced," writes Stephen Bersey, HSBC's head of US technology research, in the February report. The firm upgraded CrowdStrike to 'buy' and maintains 'buy' ratings on Oracle, Microsoft, ServiceNow, Salesforce, and Palantir, while downgrading IBM and Asana on structural concerns.
Software companies will capture the lion's share of AI value
HSBC's core thesis challenges the prevailing narrative that AI coding assistants will disrupt traditional software vendors. The bank draws parallels to the internet era, when initial value creation concentrated in physical infrastructure like servers and fibre optics before shifting decisively to software applications.
The analysts expect AI hardware scarcity to persist for several years due to GPU shortages, power constraints, and data centre limitations. This scarcity reinforces their view that lasting value will flow to software platforms capable of monetising AI through scalable, repeatable use cases.
"We see AI as the primary source of value creation of the software stack, with the largest share of long-term value accruing to software rather than hardware," the report states.
Enterprise complexity creates defensive moats
HSBC dismisses concerns that large language models will simply rewrite legacy applications. The bank notes that LLMs trained on public data lack knowledge of optimised, large-scale private architectures developed over decades by companies like Oracle and SAP.
Even with strong code, new entrants face daunting barriers, the report argues. Enterprise software requires years demonstrating 99.999% uptime, error-free operations across diverse IT environments, trusted brands, and enterprise sales forces. Switching costs remain prohibitively high given risks of revenue disruption, productivity loss, and unforeseen system failures during platform replacements.
Agents emerge as the primary monetisation vehicle
The bank predicts 2026 will see widespread deployment of task-specific, workflow-embedded AI agents across Fortune 2000 companies and small businesses. Unlike generic chatbots, these agents operate within defined parameters that allow enterprises to manage risks and control usage.
This agent-driven approach enables the controlled, governable AI adoption that enterprises demand. HSBC expects inference demand to surpass training requirements over time, driving sustained growth in compute consumption as agentic AI becomes pervasive.
The firm characterised 2024 and 2025 as building years focused on developing AI models, infrastructure, and code integration. Now, with those foundations in place, enterprise-level deployment can accelerate. The analysts maintain 'reduce' ratings on CoreWeave and Palo Alto Networks alongside IBM and Asana