Guggenheim Securities moved three enterprise software names to Buy, saying investor concern about the impact of artificial intelligence has produced overly pessimistic valuations across the sector. The brokerage upgraded Salesforce, Check Point Software Technologies and ServiceNow, and set explicit price targets for each company while outlining a broader view of how AI may affect software demand and multiples.
Upgrades and targets
- Salesforce was upgraded to Buy from Neutral with a $228 price target. Guggenheim noted the stock has fallen roughly 41% year-to-date and said current market prices appear to price in a very negative AI outcome, even as the firm acknowledges agentic AI may pose long-term risks to the company's growth.
- Check Point Software was raised to Buy with a $188 price target. The brokerage highlighted Check Point's recurring revenue and cash flow profile and said the shares trade at a meaningful discount to peers.
- ServiceNow was upgraded to Buy with a $125 target. Guggenheim stated that ServiceNow remains positioned for double-digit growth even though the mechanics and timing of AI monetization for the company remain uncertain.
Guggenheim's sector view
The firm said fears of an AI-driven "SaaSpocalypse" have pressured valuations across software, but that those prices imply perpetual declines that are unlikely to occur. Guggenheim expects subscription revenue growth across the software sector to stabilize in 2026 and potentially reaccelerate in late 2026 and 2027, which would support higher valuation multiples than currently embedded in share prices.
Guggenheim also outlined which parts of the software ecosystem it believes AI will favor and which it expects to face headwinds. The brokerage identified cloud infrastructure, security and data intelligence as likely beneficiaries of AI adoption. Conversely, it flagged potential pressure for DevOps, workplace collaboration and horizontal applications.
Concluding assessment
While acknowledging that AI will reshape the industry and that certain companies may face slower growth trajectories, Guggenheim argued many established software vendors should remain relevant and profitable. The upgrades reflect the firm's view that current market valuations are pricing in an excessively dire outlook for those incumbents.
Market note: The article referenced movements in the stocks mentioned (CHKP +2.18%, CRM +4.25%, NOW +6.54%).