What Happened?
A number of stocks jumped in the afternoon session after Guggenheim's John DiFucci upgraded both Salesforce and ServiceNow to Buy, arguing the AI-disruption fear that gutted the sector during the year had pushed valuations too low.
This was a valuation call from a skeptic, not an AI endorsement. DiFucci wrote he is "not upgrading because we see [ServiceNow] as an AI beneficiary," calling near-term AI monetization "unlikely to materialize" and AI risks "very real," while arguing the darkest scenario was already priced in (CRM at ~3.7x EV/recurring revenue; NOW's $125 target at 7.5x EV/NTM recurring revenue). The read-through was what lifted the group.
When a previously cautious, highly ranked analyst flips to Buy on the two enterprise-SaaS bellwethers purely on valuation, it signals the "SaaSpocalypse" repricing overshot, de-risking the whole complex and inviting bargain-hunting across peers. Oracle's ~2% bounce added an independent second leg, driven by inclusion on William Blair's July Analyst Conviction List, a new AI product, and oversold conditions after the previous disclosure of a $40 billion AI-infrastructure raise. Together they extended a multi-week recovery.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Cloud Monitoring company PagerDuty (NYSE: PD) jumped 4.2%. Is now the time to buy PagerDuty? Access our full analysis report here, it’s free.
- HR Software company Paychex (NASDAQ: PAYX) jumped 5%. Is now the time to buy Paychex? Access our full analysis report here, it’s free.
- E-commerce Software company Commerce (NASDAQ: CMRC) jumped 5.6%. Is now the time to buy Commerce? Access our full analysis report here, it’s free.
Zooming In On Commerce (CMRC)
Commerce’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 2 days ago when the stock gained 3.9% on the news that the United States and Iran agreed to halt their tit-for-tat military exchanges, easing fears of a wider Middle East conflict that had rattled markets over the weekend. The relief lifted the whole risk complex.
The pre-existing trigger was the chip-to-software rotation, sparked by a June 25 report that OpenAI may delay its IPO, which softened the "SaaSpocalypse" fear that AI labs would quickly cannibalize incumbent SaaS. The Iran news matters for software through the rate channel.
Lower oil eases the inflation impulse that had pushed traders to price in a Fed rate hike later in the year, and falling rate-hike odds disproportionately help long-duration, high-multiple growth software exactly the cohort hit hardest in 2026. So, the de-escalation removed a macro overhang, at the same moment the micro narrative (OpenAI's constraints) reduced the existential AI-disruption fear.
Commerce is down 22.5% since the beginning of the year, and at $3.15 per share, it is trading 42.9% below its 52-week high of $5.51 from November 2025. Investors who bought $1,000 worth of Commerce’s shares 5 years ago would now be looking at only $48.47.
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