BofA Raises Price Targets on 10 Software Stocks as AI Disruption Fears Fade
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Bank of America raised price targets on 10 software stocks including ServiceNow, Snowflake and Figma, citing sector-wide multiple expansion and fading fears that AI will disrupt — rather than empower — the software industry.
Why raise 10 stocks at once?
Analyst Tal Liani was explicit: the upgrade reflects sector-wide valuation multiple expansion, not a change in fundamental views.
This means → the yardstick for pricing the whole sector moved up a notch, not individual earnings outlooks.
He attributed the recent software rally to three factors: accelerating earnings at some infrastructure-software names, valuations rebounding for large-cap and application software, and easing fears that AI will cannibalize the industry.
OpenAI is slowing — why does that help software stocks?
OpenAI's Q2 revenue reportedly grew 18% quarter-on-quarter to $6.7 billion, but operating losses widened from $9.3 billion to $12.3 billion.
In plain terms = OpenAI is earning more yet losing even more; its growth momentum is cooling.
This means → the market's worst-case script — "AI-native companies crush traditional software" — looks less credible. Raymond James analyst Adam Tindle said the slowdown "reduced the perceived existential threat of AI killing SaaS businesses."
Software rallied broadly on Wednesday: ServiceNow closed up 6.5%, Figma, Workday and Adobe gained 3%–4%, and the iShares software ETF (IGV) rose 1%.
Which stocks are favored and which are not?
Buy-rated: ServiceNow, Figma, Snowflake, Box, Asana, and Zeta. Liani argued ServiceNow's trove of enterprise-workflow data gives it a first-mover edge in deploying agentic AI — software that autonomously executes tasks.
Snowflake earned a buy on sustained strong growth plus AI-monetization potential.
Not favored: Workday held at "neutral," Adobe at "underperform." Analysts said both stocks' price gains have outrun visible fundamental inflection points.
Which saw the biggest target hike and the highest absolute target?
Workday's target jumped from $140 to $205 — a 46% increase, the largest in this round.
Snowflake's target was raised to $395, the highest absolute price among all covered names.
In plain terms = the biggest target hike went to a stock rated only "neutral" — meaning the analyst believes the current price already reflects most of the upside.
Can this rally last?
Benchmark analyst Yi Fu Lee said sentiment is undergoing a fundamental shift: "The market is starting to see software as a beneficiary of enterprise AI deployment, not a victim of AI disruption."
This reflects a widening divide within the sector: companies with clear AI-monetization paths are getting re-rated, while those riding sentiment alone may be hitting a ceiling.
This means → the next litmus test is whether each company can deliver hard data on AI adoption, customer spending and monetization. Narratives are not enough — the market wants receipts.
Content is for reference only, not financial advice.