Guggenheim Securities: Upgrades ratings for Salesforce, Check Point, and ServiceNow, says AI concerns are overstated!

Guggenheim Securitieshas upgraded the stock ratings of Salesforce, Check Point Software Technologies, and ServiceNow to "Buy",believing thatinvestor concerns about artificial intelligence have pushed software stock valuations to overly pessimistic levels, while in reality there is virtually no evidence showing these companies have experienced significant business impacts.

The firm noted that software stocks have recently been dragged down by the AI-driven "SaaSpocalypse" panic, but they believe current valuations imply an expectation of sustained decline, while in fact such a scenario is unlikely to materialize. Guggenheim expects thatsubscription revenue growth in the software sector will stabilize by 2026 and could potentially re-accelerate between the end of 2026 and 2027, supporting higher valuation multiples than currently reflected in share prices.

Guggenheim has upgraded Salesforce from "Neutral" to "Buy"with a target price of $228, pointing out that the stock has fallen approximately 41% year-to-date, creating an attractive entry opportunity. Although the firm acknowledges that Agentic AI poses some long-term risks to Salesforce's growth, they stated that the current valuation has already fully priced in excessively pessimistic outcomes.

The firm has also upgraded Check Point’s rating to "Buy"with a target price of $188, citing a clear discount to peers, while its recurring revenues and cash flow remain robust. In addition, ServiceNow was also upgraded to "Buy" with a target price of $125. Guggenheim believes the company still has the potential for double-digit growth, even though AI monetization prospects remain uncertain.

Guggenheim pointed out thatAI will reshape the software industry landscape, with sectors such as cloud infrastructure, cybersecurity, and data intelligence likely to benefit, while fields like DevOps, workplace collaboration, and horizontal application software may face some pressure. However, the firm believes that many mature software companies can retain competitiveness and maintain profitability even if their growth trajectories slow.