Street Calls of the Week
Investing.com -- Shares in Software-as-a-Service (SaaS) firms have come under heavy pressure following OpenAI’s latest product announcements, but Bank of America (BofA) argues the selloff looks disconnected from fundamentals.
Concerns about agent-based AI disrupting the software sector resurfaced after OpenAI showcased video use cases across front office functions such as lead conversion, customer support and contract management.
Shares of front-office SaaS companies dropped 16% over the past five days, compared with a 1% gain for the Nasdaq.
However, BofA analyst Brad Sills said that “the negative stock reactions appear disconnected to the fundamentals and industry feedback coming from the channel and customers on AI adoption and vendor choice.”
The bank’s own survey of more than 3,000 respondents in June showed only 6% had agents in production, showing how early the adoption cycle remains.
Pricing uncertainty was the main barrier, with 36% of firms citing difficulty in calculating the total cost of ownership.
“Our point here is that this software evolution is nascent, so it’s simply too early to deem incumbent SaaS vendors as AI losers,” Sills wrote.
Feedback from partners and customers also suggests that while native AI players such as OpenAI and Anthropic are seen as innovative, they lack the depth, governance, and security features required for enterprise deployment at scale.
As a result, enterprises are leaning toward AI delivered through established SaaS providers already embedded in IT stacks.
OpenAI’s recent appointment of Instacart and Meta executive Fidji Simo to lead applications points to a near-term focus on consumer monetization and advertising rather than enterprise, Sills added, giving SaaS firms more breathing room as they roll out their own agentic tools.
“The true investor takeaway from OpenAI’s announcements is not an imminent threat of SaaS disruption, but rather the long-term opportunity for AI to reimagine and enhance enterprise workflows within established software ecosystems,” he wrote.
BofA also highlighted positive channel checks. Salesforce partners reported that while some AI-related projects are being pushed into later quarters due to budget caution, no major cancellations are occurring and interest in products like Agentforce remains high.
Similarly, HubSpot partners pointed to strong demand for AI in customer support, sales prospecting and content creation, with customers valuing the ability to keep campaigns and data within HubSpot’s platform.