Salesforce Gets a Rare Double Upgrade While Adobe Is Cut to Underweight: What Analysts See in AI Software

Two big software companies, two opposite calls on the same question: will AI help them or hurt them?

On Monday, Oct. 12, Wall Street analysts made two moves that sum up the big debate in software stocks. Bank of America raised its rating on Salesforce two full notches, from underperform to buy, betting that artificial intelligence will make its products more important. The same day, Wells Fargo cut Adobe to underweight, its lowest rating, warning that AI tools from rivals could erode demand for Adobe's creative software.

The Salesforce upgrade

Bank of America analyst Tal Liani upgraded Salesforce, the maker of customer relationship management software used by sales and service teams, to buy and raised his price target to $285 from $160. A price target is an analyst's estimate of where a stock could trade in about a year. Double upgrades that skip the neutral rating are uncommon.

It's a big reversal. In May, Liani had downgraded Salesforce, warning that AI could disrupt business software. Now he argues the opposite, writing that "if anything, AI should deepen dependence on these platforms." He pointed to Salesforce's AI agent product, Agentforce, and its Slack messaging service.

Salesforce's own numbers help his case. In its quarter ended July 31, annual recurring revenue from Agentforce passed $1.5 billion, up more than 240% from a year earlier, though AI is still a small part of the company's $11.3 billion in quarterly revenue. Salesforce shares rose as much as 5% during the day before closing up about 1.5% at $232.52.

The Adobe downgrade

Wells Fargo lowered Adobe, the company behind Photoshop, Illustrator and Acrobat, from equal weight to underweight, with a $225 price target. The concern is that Adobe's subscription revenue isn't growing fast enough and that AI image and design tools from competitors could chip away at demand over time.

Adobe shares fell about 4% to around $233.50 in the morning and were already down about 31% for the year. The downgrade followed news that the Department of Labor had suspended Adobe from its Permanent Labor Certification program, which is used in hiring foreign workers, in connection with federal investigations.

Why the split matters

For years, software companies were seen as steady growers with loyal subscribers. AI has scrambled that view. Some investors believe AI will let businesses replace expensive software with cheaper tools. Others think the biggest platforms, which already hold customers' data and workflows, will use AI to become even harder to leave. Monday's calls show analysts can land on opposite sides depending on the company.

What this means for your wallet

Analyst ratings are opinions, not guarantees, and analysts change their minds, as Liani's reversal shows. Using an upgrade or downgrade as your only reason to buy or sell can lead you to chase short-term moves.

If you use these companies' products, the analyst calls don't change your subscriptions. But AI competition could lead to new features, bundles or pricing changes, so it may pay to review whether you still need every software subscription you're paying for.

For investors, the software sector's split is a reminder of why diversification helps. Owning a broad mix of companies means you don't have to guess which side of the AI debate will win.

This article is for education only and is not financial advice. Everyone's situation is different.