The technology industry remains a hot investment area in 2026 thanks to artificial intelligence (AI), but the situation is complicated for software stocks. Wall Street analysts predict some software companies will see their business models upended by AI, resulting in share price declines across the sector.
For astute investors, this creates buy opportunities. You can scoop up shares of great businesses at attractive valuations. Two such companies are Salesforce (CRM +2.36%) and ServiceNow (NOW 2.30%).
Wall Street's fears over the AI threat resulted in both Salesforce and ServiceNow shares reaching 52-week lows on Feb. 6, with the former sinking to $187.12 and the latter to $98.94. Here's why their stocks are worth considering, and which is the better investment choice.
Image source: Getty Images.
Salesforce's answer to the AI threat
Salesforce is the leader in customer relationship management (CRM) software. Its platform helps salespeople and customer service reps manage their client base and sales processes.
Yet AI's arrival means CRM software may become obsolete in the coming years. AI agents can independently perform many customer service functions, such as answering emails, which could eliminate the need for software solutions, including Salesforce.
Given that possibility, Salesforce adapted quickly to the AI threat. The company assembled its own suite of AI agents and packaged the solutions under the Agentforce brand in 2024.
Fast forward to Salesforce's fiscal third quarter, ended Oct. 31, where it achieved record results. Q3 revenue increased 9% year over year to $10.3 billion. Consequently, the company raised its full-year sales forecast to $41.5 billion, up from the prior year's $37.9 billion.
Agentforce is growing quickly. The solution's annual recurring revenue (ARR) rose 330% year over year in fiscal Q3. However, its revenue contribution remains nascent. Agentforce's Q3 ARR totaled half a billion dollars.
NYSE: CRM
Key Data Points
How ServiceNow's business is faring
Like Salesforce, ServiceNow focuses on streamlining workflows through its platform, and despite the drubbing its stock received, the company's business is performing well. In Q4, sales hit $3.6 billion, a strong 21% year-over-year increase. The company integrated AI into its platform and views AI agents as an opportunity to expand its addressable market, thereby growing revenue.
In fact, ServiceNow forecasted its 2026 subscription sales will increase to at least $15.5 billion, up from $12.9 billion in 2025. Subscriptions accounted for 97% of 2025's $13.3 billion in revenue.
ServiceNow's CEO Bill McDermott explained why the company will remain relevant in the AI era, saying it's integrating AI in a way "where AI agents and workflows are harmonious and synonymous, creating sustained advantage."
NYSE: NOW
Key Data Points
Choosing between Salesforce and ServiceNow stocks
While Wall Street frets that AI will eat their lunch, Salesforce and ServiceNow's revenue growth shows otherwise, as their AI offerings enjoy customer adoption.
Yet due to the software sector's sell-off, share prices have reached attractive valuation levels, as evidenced by the forward price-to-earnings ratio.
Data by YCharts.
The chart reveals ServiceNow's forward earnings multiple has dropped dramatically compared to where it was over the past year. Even so, Salesforce remains a better value at about 15 times forward earnings.
For this reason, and its leading market share in the CRM space, if you have to choose one, Salesforce looks like the better stock to buy over ServiceNow.
