A growing chorus in Silicon Valley and on Wall Street believes enterprise software will join the AI party in 2025. Previously, the artificial intelligence boom had largely passed over the sector, but investors are becoming increasingly excited about the rise of so-called agentic AI. As a recent note from Bank of America explains, this doesn’t refer to regular-old chatbots, but rather powerful models that can operate autonomous digital agents capable of enhanced reasoning and decision-making.
BofA and others believe that can help unleash a sector that has lagged the broader market in recent times. The S&P North American Technology Software Index—made up of companies like Oracle, Microsoft, Salesforce, ServiceNow, Intuit, and Adobe—is up just over 20% in the past 12 months, which, while not awful, trails the benchmark S&P 500’s 25% gain. However, U.S. software stocks rallied 12% in the final quarter of 2024, according to BofA, as the Street became more bullish about agentic AI as a disruptive force.
