AI software shares jumped on Tuesday. Snowflake up over 6%; ServiceNow up nearly 4%; Figma up over 3%; Docusign, Salesforce, Workday up over 2%.

Bank of America analyst Tal Liani reinstating coverage of ServiceNow stock on Monday with a buy rating and a $130 price target. Liani wrote that the company serves a “mission-critical” role in governing and auditing artificial-intelligence agents in organizations.

Concerns about AI solutions replacing traditional enterprise software have caused ServiceNow shares to shed 34% since the beginning of the year, but Liani said the stock is attractively priced at current levels given the company’s growth and free-cash-flow generation.

“While AI is disrupting the software landscape, we think [ServiceNow] stands to benefit from, rather than be replaced by, new AI solutions,” Liani said. Because the company is already deeply embedded inside corporate workflows, ServiceNow is uniquely positioned to provide compliance guardrails and deterministic business rules for AI agents, Liani said.

The company has been successfully pivoting from a seat-based to a hybrid pricing model that accounts for AI consumption. Liani noted that executives expect an average price bump of 20% to 30% as clients move into higher-tier bundles. Liani also highlighted that ServiceNow’s recent acquisitions of cybersecurity companies Armis and Veza expand the company’s addressable market and strengthen its AI Control Tower offering.

The broader software sector is seeing other green shoots as well. Shares of the iShares Expanded Tech-Software Sector ETF gained 1%.

Jefferies analyst Jeffrey Favuzza wrote in a Monday morning note that infrastructure software and cybersecurity stocks have been particular outperformers recently. Investors have bet on these companies to be more AI-resistant, as their business models are tied to the boom in demand for AI computing.

However, application-software stocks are also participating in the rally. Shares of Figma, which have been heavily battered since the company’s public listing last year, have risen 17% since last Thursday, including a 6.3% gain on Monday.