Jefferies resets software ratings, downgrades 4 stocks

Investing.com -- Jefferies refreshed its U.S. applications software coverage, flagging rising AI disruption risks across the sector and downgrading four names to Hold while highlighting a select group of preferred stocks.

App software names have underperformed the broader software benchmark, with many stocks down roughly 30% to 55% year to date versus a 24% drop for the IGV index. Against this backdrop, Jefferies reassessed the group using a new AI risk framework combined with company-specific fundamentals and catalysts.

Analyst Brent Thill downgraded Workday, DocuSign, Monday.com and Freshworks to Hold, flagging persistent risks and weaker sentiment. For Workday, he pointed to execution concerns tied to leadership changes, saying the “medium-term growth bar needs to be lowered…again.”

On DocuSign, Thill warned that a return to stronger growth will take time, noting “double-digit growth reaccel is a ways away” and that its Intelligent Agreement Management platform still needs to prove itself.

Thill also flagged Monday.com’s “hazy outlook in both SMB and enterprise segments” and said Freshworks faces AI and competitive risks in its core customer experience business.

On the flip side, the analyst sees several vendors as better positioned for the AI transition. He prefers Intuit, Procore, Atlassian and Salesforce, pointing to more durable business models and internal AI adoption that supports growth confidence.

Intuit stands out as Jefferies’ top large-cap pick, supported by its extensive data assets and AI deployment across a large customer base. Thill also sees Procore as an attractive mid-cap vertical software story with potential revenue reacceleration as macro conditions improve.

Atlassian is viewed as a structural beneficiary of AI-driven coding trends, with Thill noting that more AI-generated code should increase demand for IT collaboration tools.

Salesforce, meanwhile, is highlighted as “best-positioned among apps vendors to deliver on AI agents,” with successful execution expected to drive broader growth acceleration.

You May Also Be Interested In

• SpaceX files for 555.56M share IPO at $135/sh
• Cosa Resources announces C$5 million bought deal private placement
• Some Glazer family members said to consider selling Manchester United plc (MANU) stake - Bloomberg