Software Sector Down 38% YTD, Salesforce Underperform at $160 Target
Goldman Sachs reports median application software stocks down 38% YTD despite brief 14% and 22% rallies, warning sustainable gains won't arrive until at least 2027. Bank of America assigns Salesforce an Underperform rating with a $160 target, projecting revenue growth of 11.1% in FY27 and 9.6% in FY28.
1. App Software Sector Slump and Brief Rallies
Application software stocks have fallen a median 38% year-to-date despite two short-lived rallies of 14% from Feb. 23 to Mar. 6 and 22% from Apr. 10 to mid-May, reflecting persistent sector weakness.
2. Goldman Sachs Cautions on Sustainable Rally
Goldman Sachs analysts project that software stocks will remain range-bound over the next several months, positing that consistent AI-driven revenue additive to whole-company growth is unlikely until at least 2027.
3. Bank of America’s Underperform Call on Salesforce
Bank of America resumed coverage on Salesforce with an Underperform rating and a $160 price target, forecasting revenue growth of 11.1% in fiscal 2027 and 9.6% in fiscal 2028, margins hovering around 34-35%, and noting AI-driven Agentforce contributed under 2% of revenue last quarter.