Enterprise AI stocks haven't been big winners for investors over the past year, as Salesforce (CRM -4.18%) and Oracle (ORCL -2.31%) shareholders will tell you. Salesforce's stock is down about 3% over the past 12 months, while Oracle's stock has cratered 55%, compared to the S&P 500's (^GSPC -0.47%) 16% gains.
But both have made big moves into artificial intelligence (AI), some of which are already yielding positive results. With the AI boom still in the early innings, investors hope Salesforce and Oracle could still be long-term winners.
So, which looks like the better bet for an AI-fueled run? Here's what you need to know.
Image source: Getty Images.
Oracle is in the midst of a major AI transition
Oracle is building its future on the company's cloud Infrastructure business, which rents out computing power to tech companies for their AI needs.
The good news is that the company has secured computing contracts from OpenAI, Meta, Nvidia, and others, and its cloud infrastructure sales soared 121% year over year to $7.4 billion in its recently reported fiscal Q1 2027 results. Some analysts believe the company is making the right move as it transforms into an AI hyperscaler, with Citizens Financial analyst Patrick Walravens recently saying that the stock is an attractive opportunity and that "Oracle offers a differentiated full-stack AI platform."
Much of Oracle's first-quarter results were good, as total sales rose 30% to $19.3 billion and non-GAAP earnings per share up 30% to $1.92. Both of which beat Wall Street's consensus estimates.
However, Oracle is spending heavily on AI infrastructure, and its recent sales growth doesn't yet justify the costs.
Oracle's capital expenditures (capex) soared 235% in the first quarter to $28.5 billion, and shareholders are increasingly concerned that building expensive AI data centers won't be worth the investment.
Their concerns aren't unfounded. The company is building a new data center in New Mexico, called Project Jupiter, and Oracle recently paused its rent payments after permitting and power supply issues had slowed progress. The total project cost for Jupiter is $165 billion and is supposed to be finished by late 2028. But investors fear that timeline could be pushed back now.
Many of Oracle's shareholders were already skeptical of the company's AI spending spree, and the latest hurdles for the Jupiter project sent the company's stock tumbling.
NYSE: ORCL
Key Data Points
Salesforce's shift to AI agents is well underway
Software-as-a-service companies are facing a difficult time as Claude and ChatGPT can perform many tasks that were once the specialty of specific tech companies. But Salesforce has transformed its customer relationship management (CRM) software over the past few years, implementing more AI services and integrations that have helped it fend off competitors.
The company has also struck deals with Alphabet to integrate its Gemini AI model into its software, so customers can build and deploy their own AI agents, and has made similar deals with Anthropic to give customers access to plug-in capabilities for Claude.
The pairing of Salesforce's software with AI agents has already had some success. The company's second-quarter fiscal 2027 sales of $11.3 billion were up 11% from the year-ago quarter, and non-GAAP earnings more than doubled to $5.90, both outpacing analysts' consensus estimates.
The company has already had to adapt to this shift by switching from a business model that primarily focused on paid seats -- how many people in a company used its software -- to a usage-based model. And analysts at KeyBanc Capital Markets said over the summer that Salesforce's AI platform, called Agentforce, has failed to impress some chief information officers at enterprise companies.
Analysts at the firm downgraded Salesforce stock over the summer and said that some of the customers it talked to said, "Agentforce, as a product, just isn't there."
Still, Salesforce's recent AI partnerships and strong quarterly results have helped push the company's stock up 55% over the past three months, despite concerns about AI disruption.
NYSE: CRM
Key Data Points
Which enterprise AI stock has more room to run?
Both companies are adapting relatively well to AI, but if I had to pick just one as the better enterprise AI stock right now, it would be Salesforce.
While there is still pressure on the company from artificial intelligence disruption, Salesforce's current moves appear to be addressing these issues adequately. I also think that some companies will feel more comfortable continuing to use legacy software that integrates AI, rather than replacing it with AI-first tools.
And, perhaps most importantly, Salesforce isn't spending as much as Oracle on its transition to AI. Oracle's capital-intensive data centers are a risky bet, and the verdict is still out on whether it will be worth the costs.
That doesn't mean Oracle is a bad stock to own; it just gives Salesforce the edge in this match-up.
