Something remarkable is happening in the software sector: stocks that Wall Street loved for a decade are getting absolutely demolished, and the culprit is the very technology that was supposed to supercharge their businesses. Artificial intelligence — once the golden child of SaaS investor presentations — has turned into the boogeyman. Salesforce is down 28% year-to-date. IBM cratered 13% in a single day after Anthropic said its Claude AI could help modernize legacy Cobol code. The entire SaaS playbook of recurring revenue and fat margins is being questioned like never before.
But here’s the thing: the panic may be wildly overdone. Salesforce just posted Q4 revenue of $11.2 billion — a 12% jump and its fastest growth in two years. Adjusted EPS of $3.81 crushed the $3.04 consensus. Marc Benioff was so confident in the disconnect between fundamentals and stock price that he announced a $50 billion buyback, quipping “because these are some low prices.” The company’s Agentforce AI platform hit $800 million in annualized revenue, and five ServiceNow customers defected to Salesforce during the quarter. Not exactly the profile of a company being disrupted out of existence.
Value-oriented fund managers are starting to circle. One compelling argument: companies like Salesforce have 150,000+ enterprise customers — including 90% of the Fortune 500 — with decades of business logic and data embedded in their platforms. Generic AI chatbots aren’t replacing that overnight, no matter how impressive the demos look. The fear that any business can “throw a few prompts into Claude and build an alternative” ignores the reality of enterprise software — switching costs are brutal, data migrations are painful, and CIOs don’t rip out critical infrastructure on a whim.
For traders eyeing the wreckage, the setup is intriguing. Salesforce now trades at roughly 35 times trailing earnings — expensive in normal markets, but cheap compared to ServiceNow (100x) or Shopify (80x). If you believe that enterprise AI adoption will ultimately benefit the companies already embedded in corporate workflows — rather than destroy them — this selloff could look like the Covid-era panic in retrospect. Wedbush’s Dan Ives agrees, calling Salesforce “a long-term winner of the AI revolution” despite the near-term carnage. Just know what you’re buying: a contrarian bet that requires patience and stomach for volatility.