Guggenheim upgraded Salesforce and ServiceNow to buy on Wednesday, arguing AI will pressure but not kill the platforms, sending shares up more than 5% and 6%, respectively, in midday trading.
Guggenheim analysts upgraded both Salesforce and ServiceNow to buy on Wednesday, arguing that artificial intelligence will pressure but not displace the two enterprise software platforms, sending their shares sharply higher in midday trading.
Salesforce climbed more than 5% following the call, while ServiceNow rose more than 6%, making both among the stronger performers in the broader market at midday.
Guggenheim set a price target of $228 on Salesforce, the firm said. Analysts characterized the upgrade as a view that attractive valuations in both stocks outweigh the competitive risks posed by the rapid expansion of AI-driven software tools.
The call is notable given Guggenheim's historically skeptical posture toward Salesforce. The firm's pivot to a bullish stance drew attention partly because of that track record.
Even so, the upgrade drew measured responses from some observers. On the company's core business, growth has remained limited, with the broader platform failing to demonstrate the kind of expansion that would typically accompany a buy rating.
The tension at the center of the Guggenheim thesis — that AI will not eliminate demand for established software platforms — reflects a debate that has intensified across enterprise technology over the past year, as AI-native tools have begun competing directly with legacy workflow and customer-relationship management software.
Salesforce's shares have faced pressure amid that environment, reinforcing why the Guggenheim upgrade carries significance beyond a routine analyst reassessment.
Meta Platforms was also among the day's notable movers, surging 11% after reports that the company is developing a new cloud business that would sell its excess AI computing capacity to outside customers. The company confirmed the development, which Bloomberg had initially reported.
Elsewhere in Wednesday's session, memory chipmakers Sandisk and Micron Technology gave back recent gains as investors rotated out of the sector. Sandisk fell 9% and Micron declined roughly 8% on the first trading day of the third quarter, coming off a second quarter in which both stocks more than tripled.
General Mills rose more than 6% after posting fourth-quarter adjusted earnings of 95 cents per share on revenue of $4.61 billion, topping the FactSet consensus call of 80 cents per share and $4.59 billion in revenue. The company also announced plans to generate $3 billion in cumulative cost savings through fiscal year 2030.
Progress Software rallied more than 18% after reporting second-quarter adjusted earnings of $1.62 per share on revenue of $253.5 million, beating analyst expectations of $1.49 per share and $242.7 million in revenue. The company's third-quarter earnings guidance also topped estimates.
The S&P 500 was higher to start the new month, while the Nasdaq remained under pressure as profit-taking weighed on semiconductor stocks — a group that had posted record-breaking rallies in the first half of the year.
Whether the Guggenheim upgrades catalyze sustained buying in Salesforce and ServiceNow will likely depend on whether either company can demonstrate clearer revenue growth in coming quarters, even as AI competition continues to reshape the enterprise software market.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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