RussiaBottom Line
The adoption of the law on sovereign artificial intelligence and the introduction of tax benefits for IT specialists create a powerful regulatory stimulus for the industry's development. However, a simultaneous 34% drop in net profit for software companies and a 21–50% reduction in the number of IT job vacancies signal deep structural problems. Investors should reassess their positions: increase the share of companies focused on government contracts and hardware (storage systems, servers), and reduce exposure to pure software developers with low margins.
Key Developments
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The State Duma adopted the law on sovereign artificial intelligence — starting in 2026, developers will be required to use only Russian computing power for sovereign AI models, and the use of foreign developments is prohibited. Portfolio implication: Accelerated demand for domestic server solutions and data centers. Beneficiaries include hardware manufacturers (e.g., Sitronics, YADRO) and data center owners. Risk for companies dependent on imported chips or cloud platforms.
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Tax benefits for IT workers and AI developers for 5 years — a presidential decree sets a personal income tax rate of 5% and insurance premiums of 12% for this category, and from 2026, maintaining the benefits requires investment in personnel. Portfolio implication: Reducing the tax burden increases the industry's attractiveness for talent, but the new condition (investment in personnel) will increase companies' operating expenses. Large players with their own training centers will benefit; small startups will lose out.
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Net profit of software companies fell by 34% over six years — despite revenue growing from RUB 1.12 trillion (2019) to RUB 2.8 trillion (2025), profitability has sharply deteriorated, leading to reduced investment in the industry. Portfolio implication: The sustained decline in margins calls into question the valuation of many public and private software companies. It is recommended to avoid firms with a high share of payroll costs and low revenue diversification, favoring platform solutions with recurring revenue.
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The IT labor market is cooling: the number of vacancies decreased by 21–50%, salary growth has nearly stalled — in the first half of 2026, the number of job offers fell, while the number of resumes increased by 21%. Portfolio implication: Reduced competition for personnel will temporarily ease wage pressure, but indicates a slowdown in hiring and a reassessment of companies' investment plans. This is negative for recruitment agencies and EdTech, but positive for employers who can maintain margins.
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Sales of Russian software exceeded RUB 5 trillion in 2025, government procurement of storage systems grew by 15% — the Prime Minister announced record sales, and the volume of government procurement of data storage systems reached RUB 16.2 billion. Portfolio implication: The growth confirms the success of import substitution in software and hardware. However, 99% of companies acknowledge a 'hardware' crisis, creating a niche for domestic server and storage system manufacturers. It is recommended to increase the share of vendors registered in the domestic equipment registry.
Sector Pulse
| Indicator | Assessment | Trend |
|---|---|---|
| News Flow | High | Stable |
| Sentiment | Neutral | Deteriorating |
| Policy Environment | Supportive | Easing |
| Key Theme | Import substitution and AI regulation amid deteriorating financial health of the industry | — |
Risk Watch
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Risk of declining profitability for software companies — a 34% drop in net profit alongside revenue growth indicates uncontrolled cost increases. The requirement to invest in personnel to maintain tax benefits further pressures profitability. Probability: High. Impact: High.
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Risk of reduced capital expenditure on data centers — in 2026, capex on new data centers will fall by 30% (to RUB 515 billion), and total capex by 10%. This limits the ability to scale cloud and AI services. Probability: Medium. Impact: High (for data center operators and equipment manufacturers).
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Risk of labor market overheating and talent outflow — a reduction in vacancies (up to -50%) alongside a rise in resumes (+21%) could lead to a loss of qualified specialists who may move to other sectors or abroad, especially if salaries stop growing above inflation. Probability: Medium. Impact: Medium (long-term damage to innovation potential).
Outlook
Key events and indicators for the next week:
- Dynamics of Russian software sales and government procurement data for June 2026 (confirmation of the trend from the Prime Minister's report).
- Clarifications from the Ministry of Digital Development on the criteria for a 'sovereign' AI model and the timeline for implementing computing power requirements.
- Quarterly reports from major IT companies (especially in the software and cloud services segment) — we expect worsening profit figures.
Positioning: Focus on companies with a diversified client base and strong positions in the public sector, particularly in the hardware and data storage systems segment, where sustainable procurement growth is evident.