Citigroup has downgraded six major application software stocks from Buy to Neutral, citing a lack of near-term catalysts and growing concerns that AI-native platforms are threatening traditional software business models. The affected companies are DocuSign (DOCU), Similarweb (SMWB), Autodesk (ADSK), Nice (NICE), CCC Intelligent Solutions (CCCS), and Veeva Systems (VEEV). Citi analyst Tyler Radke slashed price targets across the board, with the most severe cut applied to Similarweb, dropping from $8.50 to $3. DocuSign's target was cut from $99 to $50.
The downgrade follows DocuSign's report of just 8% revenue growth for fiscal 2026, a pace Citi deemed insufficient to justify its prior premium valuation. The stock fell roughly 6% on April 10th, extending a two-day losing streak. Year-to-date, DOCU is down approximately 34.5% and trades 54.7% below its 52-week high.
Anthropic's launch of Claude Managed Agents – autonomous AI systems for complex tasks – was highlighted by Piper Sandler analyst Billy Fitzsimmons as a direct competitive threat to software incumbents. This announcement contributed to broader sector anxiety, fueling fears that AI agents could erode the addressable market for dedicated SaaS tools like electronic signatures.
Both Citi and Piper Sandler now favor companies that monetize AI compute directly, such as hyperscalers Microsoft and Oracle, over traditional software vendors. The sentiment shift has reignited a "buy hardware, sell software" trade, with hardware stocks like Marvell Technology and Intel gaining while software ETFs and major names like Salesforce and Adobe declined.
