Citi spots AI upside in two software stocks despite earnings and execution risks

Citi identifies potential upside in Appian (APPN) and Pegasystems (PEGA) software stocks, citing growing demand for AI-powered business process automation solutions. While the bank acknowledges execution risks and near-term challenges for Pegasystems, it maintains a Buy rating and higher price target, emphasizing its undervaluation and long-term growth potential.

Appian, on the other hand, is Citi's preferred pick, citing stronger execution, accelerating cloud growth, and improving government demand. The bank highlights Appian's 22% year-on-year cloud revenue growth and record third-quarter awards, while noting the importance of sustained cloud growth and AI product monetization for future upside.

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