Jefferies Resets Software Ratings: Which Stocks Were Downgraded and Which Are Preferred

TLDR

• Jefferies downgraded Workday, DocuSign, Monday.com, and Freshworks to Hold due to AI disruption risks
• Software stocks are down 30–55% year to date, worse than the IGV index’s 24% drop
• Jefferies prefers Intuit, Procore, Atlassian, and Salesforce as better positioned for the AI shift
• The iShares software ETF has hit a price level where buyers have historically stepped in
• A Microsoft board member made the first insider share purchase in 10 months, a traditionally bullish signal

---

Jefferies has reset its coverage of U.S. software stocks, downgrading four companies and flagging rising risks from artificial intelligence across the sector.

Analyst Brent Thill cut Workday, DocuSign, Monday.com, and Freshworks to Hold. He cited weak sentiment, competitive pressure, and slower-than-expected growth for each name.

DocuSign, Inc., DOCU

For Workday, Thill pointed to leadership changes and execution concerns. He said the company’s medium-term growth expectations need to be lowered again.

DocuSign was flagged for slow progress on its Intelligent Agreement Management platform. Thill said a return to double-digit growth is still a long way off.

Monday.com received a downgrade due to what Thill called a hazy outlook in both its small business and enterprise segments. Freshworks faces AI competition in its core customer experience products.

The broader software sector has taken a heavy hit. Many stocks are down 30% to 55% year to date. The IGV software index is down around 24% over the same period.

Jefferies used a new AI risk framework alongside company fundamentals to reassess the group. The goal was to separate companies at higher risk from those better suited to adapt.

Jefferies’ Preferred Software Stocks

On the positive side, Thill highlighted Intuit, Procore, Atlassian, and Salesforce as preferred names. He sees these companies as more durable businesses with stronger internal AI adoption.

Intuit is Jefferies’ top large-cap pick. The company’s large data assets and wide customer base give it an edge in deploying AI tools.

Procore was called out as an attractive mid-cap vertical software play. Thill expects revenue to pick up as broader economic conditions improve.

Atlassian is seen as a direct beneficiary of AI-driven coding trends. More AI-generated code means more demand for IT collaboration tools, which is Atlassian’s core business.

Salesforce was described as the best-positioned apps vendor to deliver on AI agents. If execution goes well, it could drive wider growth across the company.

Software ETF Hits Historical Support Level

Separately, the iShares Expanded Tech-Software Sector ETF has fallen 31% from its late September record high of just over $117. It recently hit a low of just over $79.

That price level lines up with where buyers have stepped in before. The ETF found support near $81 after a selloff in April 2025, and in the high $70s to low $80s during 2023 and 2024.

Bank of America’s Savita Subramanian has cautioned that valuations could fall further. She says earnings estimate changes suggest forward price-to-earnings multiples may have more room to drop.

One closely watched signal came from inside Microsoft. Board member John Stanton purchased 5,000 shares worth close to $2 million late this month. It was the first insider buy at Microsoft in 10 months, according to Jefferies trading analyst Jeff Favuzza.

Favuzza noted that since early 2022, insiders have mostly sold into Microsoft rallies. The one prior instance of insider buying was followed by a 51% stock gain over six months starting last April.

The post Jefferies Resets Software Ratings: Which Stocks Were Downgraded and Which Are Preferred appeared first on CoinCentral.