Software's AI stress test

Let’s talk about some of tech’s biggest names—and no, not the one Jensen Huang runs.

While Nvidia does dominate the AI headlines, two software heavyweights just delivered earnings that offer a clearer read on how the AI trade is holding up:

• Salesforce topped fourth-quarter expectations on both revenue and earnings, with sales rising 12% year over year, its fastest growth rate in two years. While its fiscal 2027 revenue outlook came in slightly below Wall Street forecasts, management underscored confidence by authorizing a $50 billion share repurchase program and increasing its quarterly dividend by nearly 6%. Shares climbed 4.01% today.
• Snowflake also beat quarterly estimates, with product revenue, its core growth driver, jumping 30% to $1.23 billion. It guided to $5.66 billion in product revenue for fiscal 2027, a 27% increase year over year. Shareholders liked the sound of that, and the stock rose 2.23%.

Rewriting the AI narrative

These results come as software stocks have spent the last few weeks sliding on fears AI could disrupt SaaS economics, worries that intensified after Anthropic’s latest releases rattled the sector and erased nearly $1 trillion in value earlier this month.

Since then, the tone has shifted. Anthropic’s enterprise partnerships and Claude updates suggest AI may integrate into existing platforms rather than replace them, transforming the narrative from disruption to augmentation. It’s a stance Nvidia CEO Jensen Huang supports: He says “markets got it wrong,” contending that agentic AI won’t sideline software platforms, but depend on them more heavily, driving greater productivity.

To that end, Salesforce has rolled out an AI-powered Slack assistant, closed its $8 billion Informatica acquisition, and unveiled plans to acquire marketing firm Qualified. The company is also accelerating adoption of Agentforce, its AI technology to automate customer service and other enterprise workflows: annual recurring revenue for Agentforce climbed 169% year over year to more than $800 million last quarter, making it an increasingly important part of Salesforce’s business.

Meanwhile, Snowflake is taking a similar approach: it launched its Snowflake Intelligence agentic platform in November, signed the largest deal in company history worth over $400 million with an undisclosed client, and entered separate multi-year $200 million partnerships with OpenAI and Anthropic to integrate advanced models into its platform.

While both companies seem to be well prepared for AI’s growing influence in their industry, the market’s muted reaction to earnings results suggests caution lingers. The numbers were solid. The strategy is clear. But with Salesforce still down 24.72% in 2026, and Snowflake down 21.14% year to date, investors aren’t ready to declare either stock safe just yet.—SY