Investment firm Piper Sandler downgraded three enterprise software stocks on Tuesday and cut the price targets on several others, amid continued investor apathy towards the sector.
“We can simplify the bear narratives to two theses: 1) AI efficiencies will pressure headcount growth or drive headcount declines, serving as a headwind to software names that sell on a per-seat basis and 2) the vibe coding capabilities of the leading LLM providers will mean customers will vibe code their own apps instead of purchasing software from the incumbents,” analysts at the firm wrote in a note to clients. “2026 is expected to be the fifth consecutive year of decelerating growth rates for software. The lower growth rates and longer-term disintermediation questions have driven the de-rating across our list.”
Piper Sandler lowered its ratings on Adobe (ADBE), Freshworks (FRSH), and Vertex (VERX) to Neutral from Overweight. The firm also cut its price targets on the trio to $330, $12, and $20, from $479, $20, and $32, respectively.
The firm also cut its price targets on Amplitude (AMPL), Asana (ASAN), BlackLine (BL), Braze (BRZE), Figma (FIG), HubSpot (HUBS), Salesforce (CRM), Oracle (ORCL), Klaviyo (KVYO), monday.com (MNDY), ServiceTitan (TTAN), and ZoomInfo (GTM).
Despite the continued pessimism surrounding software, the analysts added they still like Microsoft (MSFT) and ServiceTitan as their two top picks for 2026, even though tech is still “in the early innings of AI product ramps.”
“We see Microsoft as perhaps the best pure-play on AI adoption today,” the analysts wrote. “Respondents to our 2H25 CIO survey were incrementally positive on both Azure and Copilot activity. We would be buyers on the pullback post-F2Q26 results.”
“For ServiceTitan, the multitude of growth drivers (e.g., Max/Pro products, commercial, roofing, new trades) gives us comfort that there could be upside to revenue in FY27,” the analysts added.