Guidewire Software, Veeva Systems and Paycom Stocks Are Soaring – Here’s What You Need to Know
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What happened?
A number of stocks rose in the afternoon session after Guggenheim’s John DiFucci upgraded both Salesforce and ServiceNow to “buy,” saying fears of AI disruption that devastated the sector over the year had pushed valuations too low. This was a review call from a skeptic, not an AI advocacy.
DiFucci wrote that he was “not upgrading because we see.” [ServiceNow] as AI Beneficiaries,” he called near-term AI monetization “unlikely” and AI risks “very real,” while arguing that the direst scenario is already priced in (CRM at ~3.7x EV/NTM recurring revenue; the NOW target of $125 at 7.5x EV/NTM recurring revenue). It was the reading that gave the group a boost.
When a previously cautious, senior analyst switches to “Buy” on the two enterprise SaaS bellwethers based solely on valuation, it signals “SaaSpocalypse” new pricing, de-risking the entire complex and inviting bargain hunting from competitors. Oracle’s ~2% rise provided an independent second leg, driven by the addition of a new AI product to William Blair’s Analyst Conviction List in July and oversold conditions following the previous disclosure of a $40 billion AI infrastructure capital raise. Together they extended several weeks of recovery.
The stock market overreacts to news, and large drops can provide good opportunities to buy high-quality stocks.
The following stocks were affected, among others:
Enlarge Guidewire Software (GWRE)
Guidewire Software shares are highly volatile, with 28 moves of more than 5% in the last year. In this context, today’s move suggests that the market considers this news meaningful, but not something that would fundamentally change its perception of the company.
The last big move we wrote about was 9 days ago, when the stock fell 4.2% following news that a confluence of top AI talent was leaving Alphabet and a regulatory overhang weighed down the entire communications services and software complex.
Alphabet fell about 6%. Microsoft has also slipped. If the two largest software-adjacent megacaps decline together, the sector indices automatically follow based on their index weighting. But the deeper driver was the market’s ongoing fear that AI agents would undermine the subscription model that underlies the traditional economics of enterprise software. This fear had increased throughout the year. Salesforce is trading at around $152, down about 43% year-to-date and near its 52-week low. Adobe has fallen about 49% over the past year and hasn’t posted profits this cheap in over a decade.
Accenture’s collapse the previous week, a nearly 20% drop in a single day after the consulting giant slashed its growth outlook and pointedly noted that AI was depressing demand for traditional IT services, was a new confirmation of this thesis. When the world’s largest IT services company signals that AI is eating up its billable hours, investors apply the same logic to the software providers whose products configure those hours.
The counterargument is that the sale has become indiscriminate. Salesforce is a Rule of 40 company that is retiring 10% of its shares through a $25 billion buyback, giving it the largest AI revenue line in the category. Additionally, the company is acquiring usage-based billing platforms like m3ter to monetize the actions of AI agents rather than seats. Monness upgraded the stock to Buy last week based on the valuation. The market values the cannibalization as if it had already occurred; The profit and loss statements may indicate otherwise. But until these companies can demonstrate that AI revenues are growing faster than they erode legacy subscription bases, software could remain in the penalty box even on days when the rest of tech (particularly chip stocks) is celebrating.
Guidewire Software is down 30.3% year-to-date and is trading at $130.79 per share, 50.1% below its 52-week high of $261.88 set in September 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Guidewire Software shares five years ago would now be considering a $1,161 investment.
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https://finance.yahoo.com/markets/stocks/articles/guidewire-software-veeva-systems-paycom-211300377.html
