Guggenheim Sees ServiceNow, Salesforce as Buys After AI Selloff
A Guggenheim analyst argues Wall Street has overreacted to AI threats against both software giants, making their valuations attractive.
A Guggenheim analyst declared ServiceNow and Salesforce shares oversold buys on Monday, arguing that investor fears over artificial intelligence disrupting the two enterprise software leaders have grown far too extreme — describing the prevailing bearish sentiment as "Armageddon" thinking that the fundamentals do not support.
The analyst acknowledged that the AI threat to legacy software vendors is genuine and should not be dismissed. However, the core argument is that the market has already priced in a worst-case scenario for both companies, pushing their valuations to levels that more than compensate for the competitive risks ahead.
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ServiceNow and Salesforce occupy dominant positions in workflow automation and customer relationship management, respectively — two segments where AI could either erode pricing power or, alternatively, serve as an upsell engine that strengthens recurring revenue. Guggenheim's call implies confidence in the latter outcome outweighing the former over the medium term.
The upgrade reflects a broader debate playing out across enterprise software: whether AI-native startups will cannibalize incumbents or whether established platforms with large customer bases and deep integrations will absorb and monetize AI capabilities more effectively. Guggenheim's stance plants a firm flag in the "incumbents survive and adapt" camp, at least for these two names.
For investors watching software sector volatility, the call signals a potential floor in sentiment for two of the sector's most closely tracked names. Continue reading at MarketWatch.com.
