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The ‘SaaSpocalypse’ might be a little dramatic
Software stocks have been trading like the robots already won. Guggenheim thinks that’s nonsense — or at least, wildly overcooked nonsense. The firm says the market has shoved the entire software group into the penalty box because of AI fears, even though recurring revenue businesses usually don’t fall off a cliff; they leak, slowly, like a roof with a bad patch job.
Salesforce gets the spotlight
The most obvious name in the report is Salesforce, which Guggenheim upgraded to Buy from Neutral with a $228 price target. That’s a tidy jump from the June 30 close of $156.66 and suggests the market is pricing CRM as if revenue is headed for a long, sad march into the abyss. Guggenheim’s view: that’s a bit too much end-of-days cosplay for a business that still has sticky subscriptions and enterprise workflows embedded everywhere.
The bigger bet: software isn’t going extinct
Guggenheim’s broader pitch is that software valuations now reflect a future where many names never grow again. The firm argues that’s not a realistic base case, especially when:
- new ARR has normalized back to 15%–20% growth in 2025 and stayed there in early 2026,
- federal software spending has turned positive again, and
- even a stale dinosaur like Computer Associates kept collecting checks for decades.
That last one is the cheekiest part of the note. Even a company that basically stopped evolving still survived long enough to get bought by Broadcom in 2018. Translation: if the zombie software company didn’t die, the ones still growing probably won’t either.
Why investors should care
If Guggenheim’s right, this is less a “software is dead” story and more a “the market got bored and sold first” story. That matters because multiple expansion can do a lot of heavy lifting even before growth re-accelerates. Big picture: if AI ends up being an upgrade cycle instead of a wipeout, software stocks may have a lot more room to run than the current mood swing suggests.