Bank of America upgraded Salesforce to Buy and raised its price target to $285 from $160, according to Finks, which reported accelerating SaaS growth and improving forecasts as analysts reassessed the risks artificial intelligence poses to established software companies.
Finks described the rating change as a two-notch upgrade. It attributed the bank’s reasoning to analyst Tal Liani, who argued that large enterprises were unlikely to abandon software responsible for critical data, business workflows and compliance requirements. That assessment concerns the durability of existing enterprise software relationships.
Revenue growth and forecasts strengthen
Finks reported that software-as-a-service revenue grew 17.5% year over year in the second quarter of 2026, the fastest pace in 15 quarters. Excluding Microsoft and Oracle, the reported growth rate was 16.3%, indicating that the figures extended beyond those two large vendors.
The figures cited by Finks also showed 2026 sector growth estimates rising to 20.6%, compared with 13.8% at the end of March. Those estimates represent expectations for growth, distinct from the second-quarter revenue increases reported for the sector.
Finks attributed the revenue momentum to charges for AI features, usage-based pricing and additional subscriptions sold to existing customers. It described Microsoft’s Copilot pricing approach as combining per-user subscriptions with usage-based tiers, illustrating how established vendors were seeking additional revenue from AI products.
That interpretation differs from the disruption concerns Finks associated with an earlier software selloff. The service reported that the sector had fallen more than 26% between late January and April amid fears that AI could replace traditional software subscriptions.
Analyst optimism remains selective
Finks reported that Bank of America had acknowledged overstating the threat AI posed to established software vendors. Its account presented the Salesforce upgrade as part of a reassessment of whether enterprise customers would replace the systems supporting their existing operations.
JPMorgan expected the software recovery to continue through third-quarter earnings, according to Finks. The bank favored Microsoft, ServiceNow, Snowflake and Cloudflare, while downgrading HubSpot from Overweight to Neutral. Those differing assessments indicate that its reported optimism did not extend uniformly across the sector.
Finks also identified Paycom, DocuSign, Workday, Twilio and Cloudflare among companies participating in the share-price recovery. It linked the changing investor outlook to expectations that software vendors could generate revenue from AI, rather than simply lose business to competing AI tools.
Share-price gains reshape valuations
In the six-month performance comparison cited by Finks, the iShares Expanded Tech-Software Sector ETF, known by its ticker IGV, gained roughly 36%, against about 15% for the S&P 500. Finks also placed the fund approximately 7% below its September 2025 peak.
The recovery had different characteristics across software categories, according to Finks. It attributed infrastructure software gains to stronger earnings forecasts, while describing the application software rally as reflecting higher valuations as investor confidence improved. Large-cap application software indices had risen an average of 42% since June ended.
Finks put large-cap SaaS valuations at 9.5 times enterprise value to sales, below a three-year average of 10.8 times. Despite the broader recovery, it reported that Microsoft, Salesforce and ServiceNow still trailed the software ETF for the year.
