just delivered a 25% earnings beat — non-GAAP EPS of $3.81 versus the $3.04 Wall Street expected — posted its fastest revenue growth in two years, and announced a $50 billion buyback. The stock dropped 4% premarket. If that doesn’t capture the absurdity of the software selloff in one sentence, nothing will.
The disconnect between what Salesforce reported Wednesday evening and how the market is reacting Thursday morning tells you everything about the fear gripping enterprise software right now. And it’s creating one of the more compelling buying opportunities in the sector.
What Salesforce Actually Reported
Let’s start with the numbers, because they’re hard to argue with. Fourth-quarter revenue hit $11.2 billion, up 12% year-over-year — the company’s strongest growth rate since early fiscal 2024. Full-year revenue reached $41.5 billion, crossing the $40 billion mark for the first time. Operating cash flow came in at $15 billion, up 15% year-over-year.
The Agentforce story is accelerating faster than skeptics expected. Combined Agentforce and Data 360 ARR reached $2.9 billion, up more than 200% year-over-year. Salesforce closed 29,000 Agentforce deals in the quarter, up 50% from Q3. Accounts in production climbed nearly 50% quarter-over-quarter. CEO Marc Benioff called Agentforce “an $800 million business” and didn’t hesitate to take a shot at the doom-and-gloom crowd: “If there is a SaaSpocalypse, I think it might be eaten by the SaaSquatch.”
Not exactly subtle. But when your company just delivered $72 billion in total remaining performance obligations — up 14% year-over-year — you’ve earned some swagger.
So why the selloff? Fiscal 2027 revenue guidance of $45.8 billion to $46.2 billion landed roughly in line with consensus but didn’t deliver the kind of upside surprise investors wanted after such a strong quarter. Current remaining performance obligations growth, a closely watched forward metric, came in at levels Morgan Stanley analyst Keith Weiss described as “disappointing” relative to expectations for a beat.
In other words, the quarter was excellent. The outlook was merely good. In a market that’s punishing software companies for breathing, “merely good” gets you a 4% haircut.
Jensen Huang Just Told You the Selloff Is Wrong
Here’s where this gets interesting. Hours after Salesforce reported, Nvidia CEO Jensen Huang — fresh off his own blowout quarter with $68.1 billion in revenue — went on CNBC and dropped a line that should be pinned to every software investor’s wall.
“I think the markets got it wrong,” Huang said, pushing back directly on fears that AI agents will cannibalize enterprise software. His argument: AI agents won’t replace software tools — they’ll become the primary users of those tools. “That’s why we assert agents are users of tools,” he explained. Huang called the current narrative a “deep misunderstanding” of how agentic AI actually works.
HSBC analysts echoed the sentiment this week, writing that “software is already eating AI” and projecting the software sector will capture the lion’s share of AI value creation — not hardware. They see 2026 as the “kick-off” year for enterprise AI monetization.
The has lost nearly 18% year-to-date. The S&P 500 Software & Services Index is down roughly 23% from its peak. At some point, the rubber band snaps back.
How to Play the Software Rebound
The case here isn’t that AI disruption is fake — it’s that the market has wildly overpriced the risk while underpricing the companies actually building AI products that work. Here are five names worth watching.
- Salesforce (CRM) — at roughly $185, the stock trades at about 24 times trailing earnings and just 4.5 times forward revenue. The consensus analyst price target sits around $300, implying more than 60% upside. Wedbush’s Dan Ives — one of the most vocal software bulls on the Street — has a $375 target. The $50 billion buyback provides a meaningful floor, with Benioff himself noting “these are some low prices.” The Agentforce deployment rate of 14% (just 4,000 of 29,000 deals in production) is both the biggest risk and the biggest upside catalyst — if that conversion accelerates, this stock reprices fast.
- — trading near $104, down a staggering 34% year-to-date and more than 44% from its 52-week high of $211. This is a company growing subscription revenue 21% year-over-year with a CEO buying stock with his own money. The average analyst target of roughly $203 implies nearly 95% upside. ServiceNow’s ITSM dominance gives it exactly the kind of entrenched workflow position that Huang’s “agents use tools” thesis supports. At 62 times earnings, it’s not cheap in absolute terms — but for a 20%+ grower with 97% customer retention, this is as discounted as it gets.
- — shares have been cut nearly in half over the past year, trading around $138 versus a 52-week high of $281. The enterprise HR and finance platform is one of the stickiest software products in corporate America, with multi-year implementation cycles that make switching costs enormous. Workday reports next quarter, and if the Salesforce playbook is any guide, a strong print could trigger a sharp reversal. The stock is down 46% in twelve months. That’s pricing in a lot of bad news that hasn’t actually materialized in the financials.
- — at approximately $234, HubSpot recently reported Q4 results that topped expectations, accompanied by a $1 billion buyback program and an optimistic 2026 outlook calling for roughly $3.7 billion in revenue (18% growth). The stock has been beaten down more than 68% from its 2021 highs, and the average analyst target around $464 implies nearly 100% upside. This is the small-to-mid-market CRM play that benefits if AI tools make marketing and sales automation more accessible, not less.
- iShares Expanded Tech-Software ETF (IGV) — for investors who don’t want to pick individual winners, IGV gives you the basket. Trading near $81, down from a 52-week high of $118, the ETF holds 119 positions with top weights in Microsoft (9.7%), Palantir (8.2%), Oracle (7.8%), and Salesforce (7.6%). If Huang and HSBC are right about software eating AI rather than the reverse, IGV is a compressed spring.
The Bear Case You Can’t Ignore
Fair enough — not everything is rosy. Dan Niles of Niles Investment Management offered the counterpoint after Huang’s comments: “There’s some real companies that are going to go to zero in the software space.” He sees database and cybersecurity companies as the most resilient, while commoditized workflow tools face genuine existential risk.
The Agentforce deployment gap is also worth watching carefully. Salesforce has closed 29,000 deals, but only about 4,000 are live in production. Hedge fund manager Eric Jackson flagged the 14% deployment rate as the single most important number to track: “If deployment catches booking, no 20% decline. If it doesn’t, nothing else matters.”
And the macro picture isn’t exactly cooperative. Software valuations had gotten stretched before this correction, and the broader shift from per-seat pricing to consumption-based models introduces uncertainty around revenue predictability.
But here’s the counter-counter: Salesforce just proved that the best companies in this space are growing revenue, expanding margins, generating massive cash flow, and investing aggressively in AI — all at the same time. That’s not the profile of an industry being disrupted. That’s the profile of an industry doing the disrupting.
What to Watch
Three catalysts loom large in the coming weeks. First, Salesforce hosts its Agentforce 360 Platform Evolution webinar on February 27 — tomorrow — which could provide additional color on deployment metrics and product roadmap. Second, Workday’s next earnings report will be a critical data point for whether the “beat and drop” pattern extends across enterprise software. And third, the Federal Reserve’s next meeting in March will influence how aggressively the market is willing to reprice beaten-down growth stocks.
The software selloff has been brutal, indiscriminate, and — if Salesforce’s numbers are any indication — increasingly disconnected from reality. When the most powerful voice in AI tells you the market has it wrong, and the numbers back him up, it’s worth paying attention.
