Bank of America warns of AI threat to software sector, Anthropic's annual recurring revenue doubles to $19 billion

Investing.com — Bank of America Securities states that Anthropic’s annual recurring revenue reached $19 billion in early March, a 110% increase from $9 billion at the end of 2025. Meanwhile, the bank has lowered several target prices for European software stocks and warned that generative AI poses a generational threat to the sector.

In a research report released Monday, Bank of America mentioned that the surge in ARR coincided with Anthropic completing a Series G funding round in February, raising $30 billion with a valuation of $380 billion.

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OpenAI completed a $110 billion funding round at the end of February, led by Amazon, Nvidia, and SoftBank, with a valuation of $730 billion and an annual recurring revenue of $20 billion.

Bank of America upgraded Temenos from “Neutral” to “Buy,” raising the target price from CHF 92 to CHF 96, and downgraded Sinch from “Neutral” to “Underperform,” lowering the target price from SEK 35 to SEK 25.

The bank also lowered Sage’s target price from 1,593 pence to 1,316 pence, and TeamViewer’s from €15 to €10, while maintaining both stocks’ buy ratings.

Since mid-2025, the global software company’s enterprise value/EBITDA multiple has fallen about 40%, with the European software sector currently trading at 11.7x, compared to a five-year average of 19.1x.

Bank of America’s reverse DCF analysis shows that the current multiple implies a long-term growth rate of 0% to -2%, compared to an average implied growth rate of 8% previously.

Revenue growth for 2025-27 is projected at 11.5%, consistent with the five-year average, indicating that the valuation adjustment reflects a reset of expectations rather than recent fundamental changes.

Bank of America states that the report “does not consider Claude as a large, deeply integrated application suite replacement,” characterizing recent impacts as orchestration across existing systems rather than comprehensive substitution.

The bank believes Temenos faces the lowest AI risk, as the auditability of core banking operations and regulatory restrictions limit recent substitution possibilities.

TeamViewer and Sage are ranked with the highest risk. Human resources and financial analysis are seen as the earliest pressure points for AI disruption, while regulated core businesses such as ERP and banking are less affected.

For Sinch, Bank of America lowered its 2026 revenue forecast by 4.9% to SEK 26.74 billion, reduced free cash flow by 27.6% to SEK 1.37 billion, and lowered the terminal growth rate from 2% to 1%.

For TeamViewer, the bank lowered the long-term EBIT margin from 32% to 25% and applied a 10% discount to its DCF valuation to account for AI uncertainty.

The report cites a McKinsey survey from November 2025 of 1,993 respondents, which found that over 80% of organizations have yet to see a significant impact on EBIT from AI applications, with only one-third beginning to scale AI projects.

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