Software stocks extended their rally for the second consecutive session following positive analyst sentiment from Guggenheim Securities. According to latest reports, the rally lifted several technology names with Salesforce gaining 4.9%, ServiceNow rising 4.6%, and Check Point Software Technologies advancing 2.7%. The iShares Expanded Tech-Software Sector ETF climbed 3.2%, while broader IT and consulting firms also benefited from the positive momentum. Among Indian companies, Wipro's American Depositary Receipts (ADRs) rose more than 4% during the US session and were trading 2.41% higher as of 10:16 a.m., signalling a positive opening for the stock in domestic trade.
The positive sentiment extended to established technology giants, with Accenture jumping 7% to $133.17, IBM rising 4% to $292.83, and Cognizant gaining 7.14%. As reported by Bloomberg, the gains in software stocks helped offset weakness in semiconductor companies, which had weighed on the broader technology sector after an extended rally. The move followed Guggenheim's decision to upgrade Salesforce, ServiceNow and Check Point from "Neutral" to "Buy" ratings, with IBM gaining 1.21%, Cognizant advancing 1.46%, and Accenture climbing 3.15% during the latest session.
According to Guggenheim analyst John DiFucci, as reported by Bloomberg, the market has priced in an excessively bearish outlook for software companies in the age of artificial intelligence. "Valuations imply many software companies will decline into perpetuity because of AI," DiFucci wrote in a research note. However, he argued that the market's worst-case assumptions were unrealistic, acknowledging that AI-native companies such as OpenAI and Anthropic are increasing competitive pressure while maintaining that the technology does not represent a death knell for traditional software providers. "We don't believe that to be true," DiFucci added, stating that treating artificial intelligence as the "death knell" for the software industry would be "a hallucination."
The software sector has faced significant challenges this year, with the iShares Expanded Tech-Software Sector ETF declining about 12% while the Nasdaq 100 Index gained nearly 19%. Among the upgraded companies, Salesforce has been one of the biggest laggards, falling more than 40% this year and recording a 14-session losing streak last month. Check Point has dropped nearly 30% over the same period. The optimism comes after software companies endured months of selling pressure as investors questioned whether generative AI and autonomous AI agents could significantly erode the competitive position of traditional enterprise software providers.
The improved global sentiment was already reflected in Indian markets, with Wipro shares trading 2.68% higher at ₹174.69 and the Nifty IT index jumping 4.42% to 26,906, suggesting investors are beginning to look past the AI disruption narrative. Guggenheim assigned Salesforce a price target of $228, implying potential upside of more than 45% from Tuesday's closing price. For ServiceNow, the brokerage expressed confidence in the correction creating "an attractive opportunity" to own a profitable business expected to deliver double-digit organic growth, setting a price target of $125 with upside of about 26%. For Check Point, the brokerage assigned a price target of $188, representing potential upside of more than 40% from Tuesday's close, while highlighting the company's strong free cash flow generation despite AI-related headwinds.
