Guggenheim analysts have upgraded Salesforce NYSE:CRM, ServiceNow NYSE:NOW, and Check Point Software NASDAQ:CHKP, arguing that the market may be overpricing the risk that artificial intelligence could permanently damage the software sector. Analyst John DiFucci said valuations appear to suggest many software companies may decline indefinitely because of AI, but Guggenheim does not see that outcome as likely.

The upgrade comes after a sharp selloff across software stocks, as investors have worried that AI-native companies such as Anthropic and OpenAI could pressure the sector's long-term growth prospects. Salesforce, ServiceNow, and Check Point had been among the harder-hit names, with declines ranging from nearly 30% for Check Point to more than 40% for Salesforce, which also posted its longest losing streak on record last month.

Following the upgrade, ServiceNow rose 4.6%, Salesforce gained 4.9%, and Check Point advanced 2.7%, while the iShares Expanded Tech-Software Sector ETF climbed 3.2%. Guggenheim said Salesforce looked grossly undervalued, set a $228 price target implying more than 45% upside, and also pointed to possible upside of about 26% for ServiceNow and more than 40% for Check Point from their Tuesday closes.