<div id="readability-page-1">AI has transformed large parts of the tech sector over the past year, though the impact has varied significantly from one industry group to another. Chipmakers, data center operators, and infrastructure providers have enjoyed enormous gains, while software stocks have faced a far more complicated reality as investors try to determine how generative AI could alter the economics of the SaaS industry.<h3>Claim 55% Off TipRanks</h3><ul><li>Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions </li><li> Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks </li></ul> The situation has become so pronounced that some on Wall Street have started referring to it as the &#34;SaaSpocalypse&#34; – a growing concern that AI tools could eventually reduce demand for parts of the traditional software industry. At the same time, others believe the rollout of enterprise AI adoption could take far longer and prove far more expensive than initially expected, potentially giving established software companies plenty of time to adapt. The result has been substantial volatility as investors attempt to balance those competing views. The challenge now comes down to identifying which software companies can continue delivering growth while navigating a rapidly evolving environment. Bank of America analyst Tal Liani is looking at two well-known names in software, ServiceNow (NYSE:NOW) and Salesforce (NYSE:CRM), and he's choosing one as the top software stock to buy right now. Let's take a closer look. ServiceNow First up on our list is ServiceNow, a cloud computing firm that focuses on the integration of business software and AI technology. The company provides a unified platform that brings together AI, business data, and workflows, making it possible to solve IT issues before they become problems. ServiceNow describes this as an 'AI control tower,' a way to reinvent business processes for today's digital environment. Getting down to actual operations, ServiceNow gives its users a range of products for ops management, IT and HR service delivery, automated workforce governance, agentic AI tech, data control, customer service management – in short, the full array of tools that businesses need to manage and oversee day-to-day operations. No matter what the task, it's likely that ServiceNow can offer an AI or a system that can manage it. Bringing AI into the mix of its workforce and data management tools was the game-changer for ServiceNow's product offerings. The company has over 20 years of experience in the field, and its modern AI Platform is scalable, autonomous, and efficient. Better yet, for its customers, ServiceNow's AI is not a unit of its own – it is AI with human oversight, keeping people in the loop. Ironically, the same AI transition that ServiceNow is betting on has also become one of the main reasons behind the stock's steep decline over the past year. As AI models and autonomous agents grow more capable, investors have started questioning whether parts of the traditional software industry could eventually become less essential, particularly in areas tied to workflow automation and enterprise productivity tools. Looking at the recent financial report, we find that ServiceNow reported $3.77 billion in total revenue for 1Q26, a total that included $3.67 billion in subscription revenues. Both of these figures were up 22% year-over-year. The total revenue figure, $3.77 billion, was $24.22 million better than had been expected. At the bottom line, ServiceNow realized a non-GAAP diluted EPS of $0.97; this was up from $0.81 in the prior-year period and was in line with the forecasts. Yet, ServiceNow shares tumbled following the report after the company lowered its operating margin outlook and warned that geopolitical tensions in the Middle East were delaying some enterprise deals, adding to concerns surrounding near-term growth. Still, Bank of America's Tal Liani is not losing confidence. The analyst believes ServiceNow remains well positioned to benefit from the long-term AI and enterprise software shift, arguing that the recent pullback does little to change the broader thesis. &#34;While AI is disrupting the software landscape, we think NOW stands to benefit from, rather than be replaced by, new AI solutions. The starting point is strong, with the company occupying a deeply embedded mission-critical position within enterprise workflows, serving as the system that governs, routes, approves, and audits activity across organizations, making the displacement costly and complex,&#34; Liani explained. This positive stance supports Liani's Buy rating on the stock, while his $130 price target implies a one-year upside potential of ~28%. (To watch Liani's track record, click here) The Street is in broad agreement with this outlook, giving the stock a Strong Buy consensus rating based on 39 recent reviews that include 35 Buys and 4 Holds. The stock is priced at $101.83, and its $141.68 average target price indicates room for a 39% gain in the next 12 months. (See NOW stock forecast) </div>

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Bank of America analyst Tal Liani has identified ServiceNow (NYSE:NOW) as the top software stock to buy, despite recent volatility in the sector due to AI's impact. ServiceNow reported $3.77 billion in revenue for Q1 2026, up 22% year-over-year, but shares fell after lowering its operating margin outlook. Liani maintains a Buy rating with a $130 price target, suggesting a 28% upside, as he believes ServiceNow is well-positioned to benefit from AI advancements.

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Bank of America Corp

NOW or CRM: Bank of America Chooses the Top Software Stock to Buy Right Now