Piper Sandler lowers the target prices of more than ten software stocks, including Adobe (ADBE.US), warning of a "structural bearishness" caused by AI.

Investment firm Piper Sandler downgraded the ratings of three enterprise software stocks on Tuesday and lowered the target prices of multiple companies, as investor sentiment towards the sector continues to remain subdued. The company analyst wrote in a report to clients, "The bearish logic can be simplified into two points: firstly, the efficiency improvement brought by AI will suppress or reduce the growth of employees in enterprises, posing headwinds for software companies that charge per seat; secondly, the 'natural language programming' capability introduced by leading large language model providers means that customers will be able to create applications on their own rather than purchasing from existing software vendors." The analyst added, "It is expected that 2026 will be the fifth consecutive year of slowing growth in the software industry. Slowing growth and long-term concerns about disintermediation have led to valuation downgrades for companies on our coverage list." Piper Sandler lowered the ratings of Adobe(ADBE.US), Freshworks(FRSH.US), and Vertex(VERX.US) from "Neutral" to "Underperform" and significantly reduced their target prices from $479, $20, and $32 respectively to $330, $12, and $20. The firm also lowered the target prices of Amplitude(AMPL.US), Asana(ASAN.US), BlackLine(BL.US), Braze(BRZE.US), Figma(FIG.US), HubSpot(HUBS.US), Salesforce, Inc.(CRM.US), Oracle(ORCL.US), Klaviyo(KVYO.US), monday.com(MNDY.US), ServiceTitan(TTAN.US), and ZoomInfo(GTM.US). Despite the continued bearish outlook on the software sector, the analyst added that they remain optimistic about Microsoft Corporation and ServiceTitan, listing them as the top two picks for 2026, even though the tech industry is still in the early stages of the "AI product climb." "We believe that Microsoft Corporation may be the best pure play in the AI application space currently," the analyst wrote. "Our survey of CIOs in the second half of 2025 shows that respondents are becoming more positive about Azure and Copilot activities. We recommend buying in on the pullback after Microsoft Corporation releases its Q2 FY26 results." The analyst added, "For ServiceTitan, the numerous growth drivers (such as Max/Pro products, commercial business, roofing services, and expansion into new industries) give us confidence that there may be upside potential in revenue for their FY27."