Bank of America's Tal Liani talks the winners and losers in AI
Speakers
Tal Liani
— Analyst, Bank of America
Summary
Bank of America analyst Tal Liani discusses winners and losers in AI software, highlighting ServiceNow as a beneficiary and Salesforce as a risk. He contrasts their AI strategies and growth trajectories, and provides a brief view on Microsoft's AI positioning.
- Tal Liani explains why ServiceNow can turn AI into a growth engine.
- Salesforce is characterized as a mature company facing AI-related growth risks.
- ServiceNow's ~20% growth is contrasted with Salesforce's sub-10% growth.
- Microsoft is described as focusing on an AI orchestration layer rather than competing directly with LLMs.
- The analyst reiterates BofA's buy rating on ServiceNow and underperform on Salesforce.
- AI is presented as a key differentiator for enterprise software companies.
Trade Ideas
ServiceNow benefits from AI growth.
ServiceNow is deeply embedded in enterprise workflows and has the right portfolio to leverage AI into a growth engine, evidenced by ~20% revenue growth. The company can turn AI into revenue growth by deploying AI agents with governance and audit trails, making it a beneficiary of AI.
Salesforce at risk from AI disruption.
Salesforce faces a major risk from AI because its growth is decelerating, its AI product Agent Force is not gaining traction, and it is becoming a mature, stable cash cow with below-10% growth. The stock deserves only 9-10x free cash flow, reflecting limited growth prospects.
