2 ‘Robust’ Software Stocks That Analysts on Wall Street Recommend Purchasing Right Now

AI Hyperscalers and the Shifting Enterprise Software Landscape

The swift ascent of AI hyperscalers has unsettled the enterprise software sector, fueling worries that established platforms may face disruption or become commoditized as generative AI technology grows more advanced and accessible. These anxieties have recently weighed on software equities, leading to notable declines—even among firms with strong growth histories, loyal customers, and recurring revenue streams. For many investors, the focus has shifted from growth prospects to the very survival of these companies in an AI-centric future.

Despite these concerns, some on Wall Street are challenging the most pessimistic outlooks. BNP Paribas, for instance, contends that certain leading enterprise software firms possess greater durability than the market currently acknowledges. Analyst Stefan Slowinski commented, “Our January survey results reinforce the recent negative sentiment in the software sector. Hyperscalers remain strong, with robust spending reported for Microsoft, AWS, and GCP, and growing demand for public cloud services. SAP and ServiceNow, in particular, showed encouraging signs of increased demand.”

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This article will explore two enterprise software stocks—ServiceNow (NOW) and SAP SE (SAP)—that BNP Paribas has identified as particularly robust in the current environment.

Resilient Software Stock #1: ServiceNow (NOW)

ServiceNow stands out as a leading provider of cloud-based digital workflow solutions. Its AI-powered platform integrates seamlessly with various clouds, models, and data sources, enabling organizations to automate workflows across multiple domains. The company’s offerings span IT service management, customer service, operational technology, and security operations. ServiceNow’s clientele includes over 85% of Fortune 500 companies and nearly 60% of the Global 2000, with a market capitalization of $138.1 billion.

Despite its strong market position, ServiceNow’s stock has declined by 12% so far this year, extending a downward trend that persisted throughout 2025 amid investor concerns that AI advancements could threaten its business model.

Although BNP Paribas Exane’s Slowinski continues to view ServiceNow as a resilient player, he recently lowered his price target for the stock from $186 to $120, signaling a cautious outlook while maintaining a “Neutral” rating.

ServiceNow: Recent Performance and Outlook

ServiceNow’s shares have experienced significant declines in recent months, largely due to fears of AI-driven competition. The selloff intensified following the launch of Anthropic’s Claude Cowork, a tool designed to handle complex tasks like coding and enterprise workflows, raising concerns that some of ServiceNow’s solutions could be replaced by advanced AI models.

Nevertheless, ServiceNow’s latest financial results show continued robust growth. In the third quarter, the company reported total revenue of $3.41 billion—a 21.8% increase year-over-year—surpassing analyst expectations by $50 million. Subscription revenue accounted for $3.3 billion of this total, up 21.5% from the previous year, fueled by both new and existing customer demand. GAAP earnings per share reached $2.40, exceeding forecasts by $0.20.

As of the third quarter, ServiceNow’s current remaining performance obligations (cRPO)—revenue expected over the next year—stood at $11.35 billion, up 21% year-over-year. The company also strengthened customer relationships, closing 103 deals worth over $1 million in new annual contract value and ending the quarter with 553 customers generating more than $5 million in ACV, an 18% annual increase.

Looking forward, ServiceNow has raised its full-year guidance for subscription revenue, operating margin, and free cash flow. The company now anticipates subscription revenue between $12.84 billion and $12.85 billion, up from its previous estimate of $12.78–$12.8 billion.

Investors are now awaiting the company’s fourth-quarter results, scheduled for release after the market closes on Wednesday. Analysts expect GAAP EPS to climb 23.08% year-over-year to $0.48, with revenue projected to rise 19.35% to $3.53 billion. Oppenheimer has expressed optimism for ServiceNow’s Q4 performance, citing solid execution and positive management commentary.

Following the recent pullback, ServiceNow’s valuation has become more appealing. The stock currently trades at a forward non-GAAP P/E of 38.25x, below its five-year average of 67.56x, though still above the sector median of 25.35x.

Most Wall Street analysts remain bullish on ServiceNow’s prospects despite AI-related concerns. Of 42 analysts covering the stock, 33 rate it a “Strong Buy,” three recommend a “Moderate Buy,” five suggest holding, and one assigns a “Strong Sell.” The consensus is a “Strong Buy,” with an average price target of $212.88—implying nearly 60% upside from the most recent closing price.

Resilient Software Stock #2: SAP SE (SAP)

SAP SE, headquartered in Germany, is the world’s leading provider of Enterprise Resource Planning (ERP) software. The company’s solutions centralize data management, enabling organizations to streamline complex operations through a unified digital suite. Its flagship product, SAP S/4HANA, leverages in-memory computing and AI to process large data sets in real time. SAP’s portfolio extends beyond ERP to include over 100 solutions in finance, HR, supply chain, customer experience, and spend management. SAP’s market capitalization is currently $272.5 billion.

Like ServiceNow, SAP’s shares have come under pressure from AI disruption fears, declining 2% year-to-date and 13% over the past year.

BNP Paribas Exane has assigned SAP an “Outperform” rating with a price target of 135 euros ($160), reflecting strong confidence in the company’s future and its strategic position in the enterprise software industry.

Jefferies has also reiterated its “Buy” rating on SAP, maintaining a 290 euro ($345) price target. Analyst Charles Brennan noted that while SAP is trading about 15% above previous valuation lows, it still appears undervalued for a company growing recurring revenue at around 15%. Brennan remarked that sentiment in the software sector is unusually low due to AI-related uncertainty, but believes SAP is now a higher-quality business than ever before.

Last week, SAP’s stock hit its lowest point since August 2024, erasing roughly $130 billion in market value from last year’s peak. The prolonged decline has been driven by concerns that AI could simplify the creation and duplication of software services, potentially putting downward pressure on prices for companies like SAP.

SAP SE: Financial Highlights and Future Prospects

In late October, SAP reported mixed third-quarter results. Total revenue rose 11% year-over-year at constant currency to 9.076 billion euros, slightly below expectations. Adjusted EPS, however, reached 1.59 euros, beating estimates and improving from 1.23 euros a year earlier.

SAP’s cloud business generated 5.29 billion euros in Q3 revenue, up 27% year-over-year on an adjusted basis, though just shy of analyst forecasts. Notably, cloud revenue accounted for 58% of total sales, up from 51% the previous year. The company’s current cloud backlog increased 27% year-over-year to 18.84 billion euros, sustaining the growth momentum from the prior quarter. Investors have closely watched SAP’s shift from traditional software licenses to a subscription-based cloud model, which provides more predictable cash flows. This transition centers on the Cloud ERP Suite, SAP’s core cloud offering.

Looking ahead, SAP expects 2025 cloud revenue to reach the lower end of its 21.6–21.9 billion euro range, while full-year adjusted profit is projected to hit the upper end of its 10.3–10.6 billion euro forecast.

SAP is also set to announce its fourth-quarter results this week. Analysts anticipate adjusted EPS of $1.72 (up 17.32% year-over-year) and revenue of $11.53 billion (up 17.88%). Citi analysts expect SAP to deliver strong Q4 results and reaffirm its outlook for accelerating revenue growth and margin expansion in the coming year.

From a valuation perspective, SAP currently trades at a forward non-GAAP P/E of 33.21x, close to the sector median of 25.35x and its five-year average of 28.99x.

Wall Street remains optimistic about SAP’s prospects. Of 27 analysts covering the stock, 20 rate it a “Strong Buy,” one recommends a “Moderate Buy,” five suggest holding, and one assigns a “Strong Sell.” The average price target is $329.08, representing a 42.4% premium over the latest closing price.