Citi backs Appian and Pegasystems on AI workflow demand

Citi's calls come as both companies try to sell software that automates business processes with AI built in. Appian has momentum: its shares have risen 28% since the close following second-quarter results, outpacing the IGV software index's 12% gain, and are up 10% year to date versus 5% for the index. Citi also points to federal demand, noting Appian and related partners secured a record $60 million in third-quarter awards, up from $49 million a year earlier.

Pegasystems presents a more mixed picture. Citi cut its price target to $52 from $55 to reflect weaker near-term visibility, even as it kept a Buy rating. The bank believes investors underestimate Pega Blueprint, an AI-powered application-design and workflow-automation tool; internal testing cited by Citi showed it could produce a demonstration application in 45 hours, compared with more than 2,000 hours using traditional development methods.

The key debate for Pegasystems is whether slower annual contract value growth reflects delayed deals and sales-process changes or a more lasting slowdown, a question likely to shape how investors read its October 20 results.