Bank of America Securities is warning investors that generative AI presents a potentially transformational risk to the software industry, even as some AI developers report very rapid revenue growth. In a note released Monday, the brokerage highlighted Anthropic’s dramatic ARR expansion and used that development as a backdrop for a broad reassessment of European software valuations and company-level risk.
According to BofA, Anthropic’s annualised recurring revenue rose to $19 billion in early March, a 110% increase from the $9 billion figure recorded at the end of 2025. That ARR acceleration occurred alongside Anthropic’s February Series G, which raised $30 billion and pushed its post-money valuation to $380 billion.
The note also contrasted Anthropic’s figures with OpenAI’s capital raise. OpenAI closed a $110 billion funding round in late February, led by Amazon, Nvidia and SoftBank, and is valued at $730 billion on roughly $20 billion of ARR, according to the brokerage.
On the equities side, BofA tweaked analyst recommendations and price targets across a number of European software names. Temenos was upgraded from neutral to buy and its price objective was increased to CHF96 from CHF92. Sinch was downgraded from neutral to underperform, with the target cut to SEK25 from SEK35. The bank trimmed price objectives on Sage to 1,316p from 1,593p and on TeamViewer to 10 from 15, while keeping Buy ratings on both Sage and TeamViewer.
BofA pointed to a substantial re-rating of the software sector. Global software enterprise-value-to-EBITDA multiples have fallen by roughly 40% since mid-2025, and European software currently trades at 11.7x compared with a five-year average of 19.1x. Using a reverse-discounted-cash-flow framework, the bank said the present multiple implies long-term growth of 0% to negative 2%, a sharp step-down from an implied 8% at the prior average multiple.
Importantly, projected top-line growth for 2025-27 of 11.5% remains consistent with the five-year average. BofA interprets this as evidence that much of the sector derating is a reset of longer-term expectations rather than a reflection of an imminent deterioration in near-term fundamentals.
Addressing the potential for large language models to displace established applications, BofA cautioned that its analysis "does not convert Claude into a generalized replacement for large, deeply embedded application suites." The bank sees the nearer-term role of models such as Claude as one of orchestration across existing systems rather than immediate, wholesale substitution.
Within its coverage, BofA ranked firms by exposure to AI substitution risk. Temenos ranked lowest on AI risk, with core banking auditability and regulatory constraints cited as factors that limit short-term substitution pressure. TeamViewer and Sage were identified as having higher exposure. The bank noted that human-resources and financial-analysis functions are among the earliest areas expected to feel pressure from AI, while regulated cores such as enterprise resource planning and core banking appear less exposed in the near term.
Specific modelling changes were detailed for affected names. For Sinch, BofA trimmed 2026 revenue estimates by 4.9% to SEK26.74 billion and cut free cash flow to equity by 27.6% to SEK1.37 billion, while lowering terminal growth to 1% from 2%. For TeamViewer, the bank reduced assumed long-term EBIT margins to 25% from 32% and applied a 10% discount to its discounted-cash-flow valuation to capture AI-related uncertainty.
The note also referenced a November 2025 McKinsey survey of 1,993 respondents, which found that more than 80% of organisations had not yet seen a meaningful impact on EBIT from AI adoption, and that only about one-third had started to scale AI programmes. That survey finding is used to temper expectations on how quickly AI will translate into measurable corporate earnings effects.
Alongside the research commentary, the original release included investor tools and promotional material for real-time stock tracking and an AI-driven stock-screener service that evaluates companies across many financial metrics and highlights potential stock ideas. That promotional content noted past examples of strong performers, and invited readers to explore whether particular stocks such as SGE feature in the services strategies.
Sector implications: The analysis and model updates have implications for the enterprise software sector broadly, and for segments such as HR tech, financial analytics, ERP and core banking. Equity valuations in European software are the immediate market focus.