CLSA: AI-Driven 'Software Demise' Concerns Overblown, SaaS Moat Remains Strong

On July 21, CLSA released an in-depth thematic report stating that despite the rise of AI models triggering market concerns about disruption in the software industry, software as a service (SaaS) is far from dead. However, the industry still needs to undergo profound changes before investor confidence returns. CLSA analysts noted: 'We are surrounded by business details, compliance requirements, and information filters managed by software. The idea that AI 'vibe-coding' could eliminate all of this sounds unrealistic. We find moats everywhere—ServiceNow's workflow catalog, Salesforce's sales associations, Oracle's precise database, Microsoft's ubiquity, Workday's HR expertise, and even Adobe's font library.' CLSA gives Microsoft and Adobe 'outperform' ratings with target prices of $535 and $300, respectively; Oracle and Salesforce 'hold' ratings with target prices of $145 and $165, respectively; and ServiceNow and Workday 'underperform' ratings with target prices of $72 and $92, respectively.