Everyone wants to talk about ServiceNow (NYSE:NOW | NOW Price Prediction) right now, because the workflow giant has become the poster child for enterprise AI and trades like it. But here’s what you should actually be watching.
ServiceNow’s story is the same story every cycle. A premium software name catches the AI updraft, the multiple expands faster than the revenue, and retirement investors get talked into paying tomorrow’s price for last year’s growth. The law of large numbers is undefeated. Once a software business hits this kind of scale, organic growth slows whether the narrative likes it or not, and an elevated earnings multiple becomes a trapdoor rather than a stepping stone. You don’t have to short the story to refuse to fund it.
The smarter rotation is into the two enterprise giants quietly weaving generative AI and database layers into corporate footprints they already own. Both trade at far more conservative multiples. Both are on sale. Neither needs a miracle to work.
Salesforce: AI Monetization Without the AI Tax
Salesforce (NYSE:CRM) is the kind of setup contrarians wait years for. The stock is down 31.84% year to date and 37.01% over the past year, yet the business is accelerating where it counts. The P/E sits at about 20, with a free cash flow yield near 9.78%. That is a value multiple wearing a growth jersey.
Three things matter here. First, Agentforce annual recurring revenue hit $800 million, up 169% year-over-year, with 29,000 deals closed. AI monetization is showing up directly in the financials. Second, total remaining performance obligations crossed $72.40 billion, giving management real forward visibility into the $45.80 billion to $46.20 billion FY27 revenue guide. Third, capital return is unusually aggressive: a fresh $50 billion buyback authorization on top of $12.7 billion already repurchased in FY26.
Marc Benioff says the company has been rebuilt as “the operating system for the Agentic Enterprise” and is targeting $63 billion in revenue in FY30. You can disagree with the slogan. The cash flow is real.
Oracle: Customers Are Literally Prepaying
Oracle (NYSE:ORCL) is the other half of the rotation. Shares are off 2.87% year to date after a sharp pullback from earlier highs, even as the fundamentals have done nothing but accelerate.
Three points carry the case. Remaining performance obligations reached $553.00 billion, a 325% jump driven by hyperscale AI contracts where customers are prepaying or supplying their own GPUs. Cloud infrastructure revenue grew 84% year over year as AI training demand outran supply. And management raised its FY27 revenue target to $90 billion, anchored to a backlog already on the books.
Capex is heavy and free cash flow is negative on a trailing basis, which is exactly why the multiple is reasonable. The market is pricing the cost and ignoring the contracted revenue. That asymmetry is the opportunity.
The Action
Salesforce and Oracle warrant a closer look for investors researching enterprise AI exposure at more conservative multiples, with the contracted backlog providing visibility into the forward thesis.
Top Gaining Stocks
Top Losing Stocks