Guggenheim Upgrades Salesforce, ServiceNow to Buy on Valuation

Guggenheim analyst John DiFucci upgraded both Salesforce (CRM) and ServiceNow (NOW) to Buy, according to a report from StockStory. The upgrade comes after a sharp selloff in the software sector this year driven by fears of AI disruption.

Rating Change

DiFucci, known for his skepticism toward the software sector, previously had Sell ratings on both stocks. He now believes current prices offer an attractive entry point.

Analyst's Rationale

DiFucci argues that fears of AI disrupting traditional software companies were overblown, leading to excessively low valuations for Salesforce and ServiceNow. He emphasized this is a valuation call, not an endorsement of AI technology.

Context

The cloud software sector has faced significant selling pressure in 2026 as AI-powered competitors emerge. However, DiFucci believes companies like Salesforce and ServiceNow have the ability to adapt and leverage AI.

What to Make of It

A rating change from a skeptic like DiFucci may signal the worst is over for software stocks. However, investors should monitor how these companies perform amid increasing competition.