Jefferies updated its coverage of U.S. applications software companies, warning that rising disruption from artificial intelligence is reshaping competitive dynamics across the group. The bank combined a newly developed AI risk framework with assessments of individual company fundamentals and near-term catalysts to re-evaluate ratings and convictions.
Analyst Brent Thill moved four stocks down to Hold: Workday, DocuSign, Monday.com and Freshworks, pointing to persistent risks and weakening market sentiment behind those calls.
On Workday, Thill cited execution concerns tied to leadership changes and wrote that the “medium-term growth bar needs to be lowered…again.” For DocuSign, he warned that a return to stronger growth will not be immediate, saying “double-digit growth reaccel is a ways away” and adding that the company’s Intelligent Agreement Management platform still must demonstrate its effectiveness.
Thill described Monday.com as having a “hazy outlook in both SMB and enterprise segments,” and noted Freshworks faces both AI-related and competitive pressures within its core customer-experience business.
Despite the downgrades, Jefferies identified a subset of vendors it views as better positioned to navigate the AI transition. The firm prefers Intuit, Procore, Atlassian and Salesforce, citing those companies’ more durable business models and signs of internal AI adoption that support confidence in future growth.
Intuit was singled out as Jefferies’ top large-cap pick, with the analyst pointing to the company’s sizable data assets and ongoing AI deployment across a broad customer base. Procore was described as an appealing mid-cap vertical software story, with the potential for revenue reacceleration if macroeconomic conditions improve.
Atilassian was framed as a structural beneficiary of AI-driven coding trends, on the view that more AI-generated code should boost demand for IT collaboration tools. Salesforce was highlighted as “best-positioned among apps vendors to deliver on AI agents,” with the expectation that successful execution could drive broader growth acceleration.
The shifts come as application software names have lagged the broader software benchmark this year: many of the group’s stocks are off by roughly 30% to 55% year to date, compared with a roughly 24% decline for the IGV index. Jefferies’ reassessment reflects those relative performance dynamics and the firm’s effort to incorporate AI risk into its coverage framework.
Contextual note: Jefferies’ changes combine sector-wide AI risk considerations with company-level catalysts and fundamentals to adjust ratings and identify preferred exposures within applications software.