MW Forget Salesforce and Adobe. This under-the-radar software stock is winning in the AI era.

By Christine Ji

Guidewire is quietly bringing AI to an overlooked corner of the market: insurance providers

Guidewire reported a strong fiscal 2025 fourth quarter as its AI offerings for insurance providers drove growth.

Artificial intelligence could be transformative for software companies, but investors have one simple message: Show me the money.

High investor expectations for AI technology have created immense pressure for software companies to deliver tangible results showing monetization, or else face a stock selloff.

While big software names such as Salesforce Inc. (CRM) and Adobe Inc. $(ADBE)$ have seen their stock prices decline by over 20% so far this year, one unflashy software name just showed that it's cracked the formula for thriving in the age of AI.

Guidewire Software Inc.'s product - a property- and casualty-insurance software platform - seems decidedly unsexy, but the company has been growing at an impressive pace. Guidewire's fiscal 2025 full-year earnings came in strong on Thursday, with the company posting quarterly revenue of $356.6 million, above FactSet analyst consensus expectations of $337.8 million, as well as annual recurring revenue $(ARR)$ of $1.04 billion, above consensus projections of $1.02 billion.

Management also gave fiscal 2026 revenue guidance of $1.39 billion to $1.41 billion, with the higher end coming in above the Wall Street consensus of $1.39 billion.

The company's stock (GWRE) popped after the earnings announcement and has rallied over 18% at the time of writing.

What sets Guidewire apart from laggard software names is its explosive growth and clear revenue visibility. The company's total annual revenue grew 23% in 2025, and its fully-ramped ARR - or the amount of revenue from fully deployed current contracts - grew 22% year over year. In contrast, Salesforce's fiscal 2025 revenue grew 9% year over year, while Adobe's grew 10%.

Citing its strong cloud execution and potential as an AI beneficiary, Oppenheimer analyst Ken Wong named Guidewire his top pick in the small- and midcap space. He maintained a buy-equivalent rating and raised his price target to $300 from $275 on Friday.

In 2024, Guidewire introduced its Industry Intel product, an AI-powered, cloud-native application designed to help insurers make faster and more precise decisions in claims and underwriting. With Guidewire's offerings, insurance companies can utilize AI to score the severity of a claim, create more comprehensive risk profiles and predict policy profitability.

"We see opportunity in underwriting and intelligent ingestion of documents and data that will power a step change in commercial underwriting efficiency," Guidewire Chief Executive Mike Rosenbaum said on the company's earnings call Thursday.

Stifel analyst J. Parker Lane pointed out that the company closed two deals for Industry Intel in the fourth quarter, and 16 of its core deals during the quarter included at least one data or analytics offering, indicating growing AI adoption among Guidewire customers. Lane also raised his price target to $300 from $275 and maintained a buy rating.

When it comes to AI beneficiaries, Guidewire has been a top pick for Bryan Wong, portfolio manager for Osterweis Capital Management's small-cap growth strategy. In Wong's view, vertical and system-of-record software companies - which are designed to meet the needs of a specific, niche market and provide an authoritative record for critical data - are best positioned to weather AI disruption and also integrate AI offerings into their existing business models.

Unlike Salesforce and Adobe, which provide software solutions across different industries, Guidewire has build highly specific offerings for property- and casualty-insurance companies, creating a sticky customer base for its technology.

In addition to providing more accurate claims underwriting, Guidewire is also streamlining document processing. "In the case of Guidewire, I think they're really well positioned to automate the claims process," which currently involves a lot of back-and-forth paperwork, Wong told MarketWatch.

Also read: The old software investing playbook is dead. Here's where to put your money now.

-Christine Ji

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September 05, 2025 12:15 ET (16:15 GMT)

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