Software stocks rise as Guggenheim says AI will not be the "death knell" for the software industry.

Guggenheim raised the ratings of three software companies, believing that concerns that the market has overblown the "lethal threat" that AI poses to the software industry, driving software stocks up across the board on Wednesday. "The current valuation of software companies reflects an expectation that many software enterprises will experience long-term decline in the face of AI impact," analyst John DiFucci wrote in a research report released on Wednesday. "We do not agree with this assessment." He added that competition from AI companies will indeed have an impact on traditional software enterprises, but the pessimistic view that the entire software industry will suffer a fatal blow as a result is just an "illusion." Software stocks have been under pressure so far this year. Investors are concerned that products launched by native AI companies such as Anthropic PBC and OpenAI will seriously weaken the long-term prospects for the traditional software industry.