The AI Threat to Software Stocks Is Real, Warns Bank of America (BAC)

Bank of America BAC -3.21% ▼ says investors are right to be worried about the threat posed to software stocks by artificial intelligence (AI).

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In a new report on the ramifications of AI, Bank of America writes that startup company Anthropic’s annualized recurring revenue hit $19 billion in early March of this year, up 110% from $9 billion at the end of 2025. Consequently, Bank of America has slashed its price targets on European software stocks such as SAP SAP -1.88% ▼ and ASML Holdings ASML +2.21% ▲ .

Bank of America warns in its report that AI poses a “generational threat” to the software sector and stocks of publicly traded software companies such as Salesforce CRM -2.66% ▼ , Adobe ADBE -1.34% ▼ , and others. The unnerving report from Bank of America arrives on the same day that Anthropic raised $30 billion in a new funding that valued the privately held AI startup at $380 billion.

The AI Apocalypse

OpenAI, which closed a $110 billion round led by Amazon, Nvidia and SoftBank in late February, is valued at $730 billion on $20 billion of ARR.

BofA upgraded Temenos to “buy” from “neutral,” raising its price objective to CHF96 from CHF92, and downgraded Sinch to “underperform” from “neutral,” cutting its target to SEK25 from SEK35.

It also lowered price objectives on Sage to 1,316p from 1,593p and TeamViewer to €10 from €15, retaining Buy on both.

Global software EV/EBITDA has fallen approximately 40% since mid-2025, with European software trading at 11.7x against a five-year average of 19.1x.

BofA’s reverse-DCF analysis shows the current multiple implies long-term growth of 0% to negative 2%, against an implied 8% at the prior average.

Projected 2025-27 top-line growth of 11.5% remains in line with the five-year average, suggesting the derating reflects expectations reset rather than near-term fundamentals.

The brokerage ranked Temenos lowest on AI risk, with core banking auditability and regulatory constraints limiting near-term substitution.

TeamViewer and Sage ranked highest. HR and financial analysis were identified as the earliest pressure points for AI disruption, with regulated cores including ERP and core banking less exposed.

On Sinch, BofA cut 2026 revenue estimates by 4.9% to SEK26.74 billion and free cash flow to equity by 27.6% to SEK1.37 billion, lowering terminal growth to 1% from 2%.

On TeamViewer, the bank reduced long-term EBIT margins to 25% from 32% and applied a 10% discount to its DCF to capture AI uncertainty.

McKinsey’s November 2025 survey of 1,993 respondents, cited in the note, found more than 80% of organisations had yet to see a meaningful effect on EBIT from AI adoption, with only one-third having begun scaling AI programmes.

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