Jefferies Resets Software Ratings Amid AI Disruption Risks

Jefferies has recalibrated its stance on U.S. software stocks, downgrading Workday, DocuSign, Monday.com, and Freshworks to Hold. Analyst Brent Thill cited AI-driven disruption, weak sentiment, and sluggish growth as key concerns. The sector has underperformed, with select stocks plunging 30–55% year-to-date—far steeper than the iShares Expanded Tech-Software ETF's 24% decline.

Thill flagged Workday's leadership turbulence and execution risks, DocuSign's delayed Intelligent Agreement Management rollout, Monday.com's murky SMB and enterprise outlook, and Freshworks' vulnerability to AI competition. Conversely, Intuit, Procore, Atlassian, and Salesforce emerged as preferred picks, deemed better positioned for the AI transition.

The iShares software ETF has reached a technical support level historically attractive to buyers. In a separate bullish signal, a Microsoft director executed the company's first insider share purchase in nearly a year—a potential inflection indicator for battered tech valuations.