BofA Reinstates ServiceNow and Salesforce with Contrasting Ratings

Bank of America (BofA) analysts reinstated coverage of two software companies, ServiceNow and Salesforce, on Monday, with sharply different views on how artificial intelligence will affect them.

Rating Changes

• ServiceNow (NOW): The team led by Tal Liani reinstated coverage with a Buy rating and a $130 price target, representing 28% upside from current levels.
• Salesforce (CRM): Reinstated with an Underperform rating and a $160 price target.

Analyst Rationale

Analysts see ServiceNow as the primary AI beneficiary among the two, given its focus on workflow automation and customer service, positioning it well to capitalize on growing AI demand. In contrast, Salesforce is viewed as facing challenges in adapting to technological shifts and competitive pressures.

Context

The reinstatement comes amid heightened interest in AI within the software sector, as companies race to integrate AI into their products. ServiceNow's stock has shown strong performance recently, while Salesforce's has been more volatile.

What It Means for Investors

The divergent ratings highlight that not all software companies are equally positioned to benefit from AI. Investors should assess each company's AI strategy and market position individually.