S&P 500 Could Hit 8,000 Soon, Morningstar Says — CRM, NOW, WDAY And MSFT Lead The August Rebound

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Morningstar’s Dave Sekera said the S&P 500 could reach 8,000 within weeks after rapidly recovering its July losses.Investors have rotated from AI hardware names such as Sandisk and Micron into previously beaten-down enterprise software stocks.Silver Lake’s reported Workday takeover talks boosted the sector and highlighted the company’s “strong moat.”Software stocks are having a comeback moment. After recent concerns that generative AI could undermine traditional SaaS business models, Salesforce, ServiceNow and Workday are suddenly back in focus as investors look for ways to play AI beyond the chip trade.The rotation has caught Morningstar market strategist’s attention, who believes that the S&P 500 could reach 8,000 within weeks, after rapidly recovering from its July losses. Morningstar Sees S&P 500 Hitting 8,000 Morningstar Chief U.S. Market Strategist Dave Sekera said recent market action had reversed the traditional pattern of stocks climbing gradually and falling quickly. “What we saw over the course of July, the stock market, where it’s taken the stairs down, here at the beginning of August, really just taking the elevator up,” Sekera said on Morningstar’s The Morning Filter podcast on Monday.The market recovered all its July losses in four trading sessions and reached new highs, he said. With the S&P 500 about 3% below 8,000, Sekera added that he “wouldn’t be surprised” to see it reach that level within the next few weeks.Beneath the index rally, Sekera identified a rotation away from stocks closely related to AI capital spending as investors questioned whether companies would earn sufficient long-term returns on their massive investments. The analyst said investors had rotated out of AI hardware stocks including Sandisk, Micron, Ciena and Western Digital, while beaten-down software names such as Salesforce, ServiceNow, Workday and Microsoft staged strong rebounds. “It’s really interesting seeing what’s going on underneath the surface as opposed to just looking at the headline index level,” he said.WDAY Deal Buzz Lifts Software Stocks Workday became a major catalyst for the software rebound after Silver Lake reportedly entered discussions to acquire the company.The talks had reportedly continued for months, and Silver Lake could recruit co-investors. While no deal is guaranteed, an acquisition could rank among the largest software take-private transactions ever. Morgan Stanley said a transaction would validate Workday’s “strong moat and large opportunity to automate the back-office.” The optimism spread across the sector, lifting Salesforce, Adobe, ServiceNow and SAP following the report.NOW And CRM Show AI Monetization Momentum ServiceNow’s second-quarter (Q2) results offered evidence that enterprise software companies can capture AI spending instead of losing business to emerging tools. The company’s AI-related annual contract value crossed $1 billion, while agentic AI deployments in production increased ninefold over nine months. Subscription revenue grew 24% from a year ago, renewal rates reached 98% and ServiceNow raised its full-year subscription-revenue outlook.Investors now view ServiceNow as a potential control layer for enterprise AI agents as its platform holds the historical workflow data and business context needed to deploy them. Salesforce’s Agentforce platform is also gaining traction. Its annual recurring revenue hit $1.2 billion in the first quarter of fiscal 2027, up 205% from the previous year. Combined Agentforce and Data 360 annual recurring revenue reached $3.4 billion.Salesforce also processed 28.6 trillion AI tokens during the quarter, up 152% sequentially, and raised the lower end of its full-year revenue guidance.Microsoft Delivers Strong AI Demand Signals Microsoft reinforced the software bull case with fiscal fourth-quarter revenue of $90 billion, up 18%, and 43% growth in Azure and other cloud services. Azure’s annual revenue surpassed $100 billion for the first time, while Microsoft’s commercial remaining performance obligations jumped 84% to $678 billion. Microsoft 365 Copilot also exceeded 30 million paid seats.Microsoft CFO Amy Hood said sequential backlog growth came largely from commitments outside the biggest U.S. AI model developers, signaling that demand was increasing. How Do Retail Traders Feel About CRM, NOW, WDAY And MSFT?On Stocktwits, retail sentiment around CRM was ‘bearish’ amid ‘normal’ message volume, while NOW and MSFT were also ‘bearish’ with ‘low’ activity. WDAY stood apart with ‘bullish’ sentiment and ‘high’ message volume. Over the past year, CRM has fallen 16%, NOW 28%, WDAY 14% and MSFT 4%.For updates and corrections, email newsroom[at]stocktwits[dot]com.Read Next: NIO Stock Rises Overnight As ‘Wagon King’ Returns In Spy Shots, Chery Takes 10% Stake In Energy Unit

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Morningstar forecasts that the S&P 500 could quickly recover its July losses and reach the 8,000 level within weeks. Market funds are rotating from AI hardware to enterprise software stocks such as CRM, NOW, WDAY, and MSFT. The software sector is showing a strong rebound driven by proof of AI monetization and expectations of M&A.

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The capital rotation from AI hardware to software has the potential to push the S&P 500 index up to the 8,000 level within weeks. The surge in AI-related annual contracts and recurring revenues for ServiceNow and Salesforce demonstrates that software is proving its AI benefits through earnings.

Future scenarios depend on the balance between the continuation of the software rally driven by accelerated AI monetization and profit-taking on hardware. Investors should monitor indicators such as AI token throughput and cloud revenue growth rates.

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