Bank of America is growing more bullish on software valuations, lifting price estimates on 10 equities as concerns that artificial intelligence could upend traditional software companies begin to fade.
The Aug. 19 research report doesn’t represent an across-the-board bullish call. BofA analysts Tal Liani, Koji Ikeda, and Matt Bullock maintained their profit projections and fundamental outlook.
Instead, the analysts say, investors are more than willing to pay up for software businesses following excellent earnings from select infrastructure names and an improved tone of large-cap and application software.
BofA raised price targets on ServiceNow (NOW), Figma (FIG), Workday (WDAY), Adobe (ADBE), Snowflake (SNOW), GitLab (GTLB), Amplitude (AMPL), Box (BOX), Asana (ASAN) and Zeta Global (ZETA).
The bank, however, remains picky, choosing startups with more growth and better prospects to turn AI use into income.
Bank of America raises ServiceNow stock price target
ServiceNow is one of BofA’s top large-cap software stocks.
The analysts retained their Buy rating and upped their price target to $150 from $130. At the $119.49 share price noted in the report, the new target provides a potential upside of over 25.5%.
BofA’s confidence also reflects higher software values.
ServiceNow reported second-quarter current remaining performance obligations growth of 21.5% in constant currency from a year earlier, ahead of Wall Street expectations of 19.5%. Subscription revenue increased 23% in constant currency, compared with the Street’s 21.9% expectation.
Related: ServiceNow investors must consider latest alert from Bank of America
AI is becoming a meaningful element of the story, too.
ServiceNow’s AI annual contract value has surpassed $1 billion and is on track to exceed the company’s $1.5 billion fiscal 2026 target, according to the report.
BofA believes ServiceNow’s control of corporate workflow context and historical data positions the company to develop agentic AI products for managed and secure enterprise workflows.
That advantage should drive high-teens revenue growth and continuous free-cash-flow growth.
Bank of America says the market is rethinking software’s AI risk.Bloomberg / Getty Images
Snowflake gets a major AI-driven price-target boost
Another favorite of BofA is Snowflake.
The bank raised its price objective to $395 from $330, or nearly 20%, while maintaining its Buy rating.
The increased target indicates almost 21% upside based on the $325.33 stock price in the research note. BofA analysts said they are more confident that demand for Snowflake is healthy and that the business can continue to monetize its AI offerings.
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The bank has Snowflake growing sales around 22% in calendar 2027, compared with 11% for infrastructure-software rivals on average.
BofA is also forecasting a free-cash-flow margin of 25% for Snowflake, compared with 18% for its peers. Analysts say the company should warrant a big valuation premium, as they expect it to develop faster and be more profitable.
Another long-term tailwind might be the bank’s estimate of the entire addressable market for AI software at $155 billion.
Workday gets a 46% price-target increase
One of BofA’s most dramatic changes was reserved for Workday.
The bank increased its price objective to $205 from $140, a jump of more than 46%.
But there’s a catch: BofA maintained its Neutral rating.
Analysts said the revised target reflects broader multiple expansion across large-cap enterprise software companies as well as “acquisition possibility.”
BofA said Workday’s position in human capital management and financial software, 97% gross retention and durable cash production warrant a greater valuation.
The firm is also advancing its AI approach with Sana, its AI interface and agent platform, and Flex Credits, its consumption-based monetization model.
But BofA isn’t ready to call an AI-driven growth inflection yet.
Workday’s revenue growth is expected to decelerate from 16.4% in fiscal 2025 to 11.5% in fiscal 2027, 11.3% in fiscal 2028, and 10.3% in fiscal 2029, the bank said.
That leaves analysts seeing the stock’s risk-reward as fairly even.
Bank of America remains bearish on Adobe stock
BofA’s new attitude isn’t helping all software companies equally.
Analysts boosted their price target on Adobe to $220 from $190, in line with the general increase in software valuations. But BofA maintained its Underperform rating.
More crucially, the $220 goal is still well below the $263.14 Adobe share price referenced in the report, suggesting a potential downside of nearly 16%.
BofA recognizes Adobe’s entrenched professional workflows, significant margins, and solid cash production. It worries about the implications of AI for the ease of generating sophisticated content and the rise of cheaper and AI-native competitors.
BofA said Adobe’s AI-first annual recurring revenue remains less than 2% of overall ARR and has failed to yield a meaningful acceleration in growth.
The bank expects Adobe’s revenue growth to slow from 10.5% in fiscal 2025 to 8.8% in fiscal 2027 and 8.7% in fiscal 2028.
BofA sees no clear near-term catalyst for a more optimistic rating unless there’s better evidence that standard artificial intelligence can reaccelerate growth.
Figma’s AI adoption catches Bank of America’s attention
BofA also restated its Buy recommendation on Figma, lifting its price target to $33 from $30.
Figma’s second-quarter revenue was up 48.2% from a year ago, and net dollar retention was 136%, the company said.
The number of customers generating more than $100,000 in annual recurring revenue increased 46% year over year.
Another potentially critical development lever is AI usage.
More than 80% of Figma customers with at least $10,000 in ARR consume AI credits weekly, according to BofA.
Analysts think that Figma’s increasing AI offering might help the platform reach beyond its usual designer audience, capture more of the software-development workflow, and ultimately drive more seat and consumption growth.
BofA raises price targets across software
The complete changes are:
Zeta Global: Buy; price target raised to $34 from $29
ServiceNow: Buy; price target raised to $150 from $130
Figma: Buy; price target raised to $33 from $30
Workday: Neutral; price target raised to $205 from $140
Adobe: Underperform; price target raised to $220 from $190
Snowflake: Buy; price target raised to $395 from $330
GitLab: Neutral; price target raised to $45 from $38
Amplitude: Neutral; price target raised to $14 from $12
Box: Buy; price target raised to $39 from $37
Asana: Buy; price target raised to $10.75 from $9
BofA also confirmed Buy ratings on Box, Asana and Zeta, while keeping Neutral on GitLab and Amplitude.
The bigger shift could be more essential than any particular aim.
Software stocks have long grappled with the question of whether generative AI will extend their markets or cannibalize the subscription companies that have been the bedrock of the sector’s profitability.
The current valuation reset at BofA shows investors are less inclined to price in the worst-case scenario across the industry.
But the bank’s contrasting views on ServiceNow, Snowflake, and Adobe underline an important distinction: AI fears may be fading for software stocks, but BofA doesn’t expect every software company to emerge as a winner.
Related: Workday’s $51 billion takeover talks could reset the software trade