By Kit Norton

Bank of America analysts reinstated coverage of two software plays on Monday, but took widely different views about how they will be affected by artificial intelligence.

A team led by Tal Liani reinstated coverage of ServiceNow with a Buy rating and a $130 price target, which currently represents 28% upside. Meanwhile, the firm reinstated coverage of Salesforce with an Underperform rating and a $160 price target. That target is 10% below current trading levels.

Liani noted that AI is driving workflow automation that is leading to Salesforce and ServiceNow "encroaching on each other's domains" while others in the software space -- including Adobe and Shopify -- are also coming under pressure from AI.

"While these players often target different subsegments, the net effect is greater overlap, and potential pressure on growth and pricing power," the analysts added.

ServiceNow stock jumped 6.6% to $101.42 on Monday and is currently up 15% in May. However, the stock remains down 34% in 2026 and is 57% below its closing high of $234.08 from Jan. 28, 2025, according to Dow Jones Market Data.

Separately, Salesforce shares climbed 2.4% to $177.59 on Monday. The stock is down 33% this year and has declined 38% over the past 12 months.

Bank of America wrote that its diverging views on the two stocks is based on ServiceNow being an AI beneficiary while Salesforce is likely to see a structural reset.

ServiceNow serves as the system that governs, routes, approves, and audits activity across organizations, making displacement costly and complex, the analyst team added.

"While AI is disrupting the software landscape, we think NOW stands to benefit from, rather than be replaced by, new AI solutions," Liani wrote.

The same can't be said of Salesforce.

The Bank of America team believes the expected reset for Salesforce raises concerns around muted new customer growth and underwhelming AI monetization.

"We believe the company is transforming from a historically high growth platform to a mature cash generator," Liani wrote.

Write to Kit Norton at kit.norton@barrons.com

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(END) Dow Jones Newswires

May 18, 2026 13:32 ET (17:32 GMT)

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