Guggenheim Upgrades Three Major Software Stocks: AI Threat Overestimated
Taylor Wilson
Guggenheim upgraded Salesforce, ServiceNow, and Check Point to "buy" in a single call, arguing the market has priced AI disruption as permanent decline — analyst John DiFucci called the bear case "a hallucination." All three stocks rose 3%–5% pre-market.
Why did one bank upgrade three software stocks at once?
Analyst John DiFucci argues current software valuations imply these companies will permanently decline because of AI.
He acknowledges AI competition is a real risk, but calls the extreme bear scenario "a hallucination."
This means → Guggenheim is not dismissing the AI threat — it is saying the market has turned a threat into a death sentence, and the pricing has overshot reality.
Where is the value in each stock?
Salesforce has fallen over 40% this year and last month set a record 14-session losing streak; target price $228, implying more than 45% upside.
ServiceNow is seen as a steady earner with double-digit organic growth ahead; target price $125, implying roughly 26% upside.
Check Point generates heavy free cash flow — the cash a company actually keeps after all necessary spending — and that trait will not change; target price $188, implying over 40% upside.
In plain terms = the logic is the same for all three: the gap opened by the sell-off is now larger than the AI risk itself.
Did the pre-market buy it?
Wednesday pre-market: ServiceNow rose 4.9%, Salesforce 4.1%, Check Point 3.1%.
The iShares Expanded Tech-Software Sector ETF gained 1.3% in sympathy.
This reflects short-term money agreeing the sell-off went too far, but whether one research note can redirect capital flows for the whole sector remains unproven.
What does the software-vs-semis money seesaw tell us?
The software ETF is down 14% year-to-date while the Nasdaq 100 is up nearly 20%; capital has piled into semiconductors — the sector has doubled this year and just posted its strongest quarter ever.
This means → the market is voting with real money: AI's winners make chips, not software.
Guggenheim's batch upgrade is essentially a bet that this consensus has gone too far — software companies will not vanish because of AI, and current prices already embed the worst-case scenario.
Content is for reference only, not financial advice.