ZACKS·2026-01-27 14:06Core Insights - Salesforce, Inc. and Adobe Inc. are prominent players in the enterprise software sector, focusing on productivity, customer engagement, and digital transformation [1][2] Salesforce Stock Analysis - Salesforce maintains its leadership in the customer relationship management market and is expanding into a broader ecosystem centered on AI, data, and collaboration through acquisitions [3] - The integration of generative AI, particularly with the rollout of Einstein GPT, is pivotal for Salesforce's growth, enhancing automation and decision-making for businesses [4] - The introduction of Agentforce and Data Cloud has resulted in $1.4 billion in recurring revenues for Q3 FY26, marking a 114% year-over-year increase, with Agentforce alone contributing $540 million, a 330% increase [5] - Financial performance remains strong, with revenues and non-GAAP EPS increasing by 10% and 34.9% year-over-year in Q3 FY26, respectively, surpassing consensus estimates [6] - The total remaining performance obligation (RPO) reached $59.5 billion, up 12% year-over-year, with expectations of a 15% increase in Q4 FY26, indicating ongoing growth [7] - Salesforce is transitioning to a more efficient and profitable enterprise solution provider while maintaining a focus on innovation [8] Adobe Stock Analysis - Adobe is experiencing growth in its AI-powered tools, such as Creative Cloud Pro and Acrobat, with new features enhancing user productivity [9] - The Firefly tool is becoming a significant growth driver within Adobe's creative ecosystem, with new mobile solutions aiding content creation [10] - Financially, Adobe reported a 10.5% increase in revenue and a 14.3% increase in earnings year-over-year for Q4 FY25, exceeding consensus estimates [13] - Adobe targets a 10.2% annualized recurring revenue growth for FY26, driven by its AI portfolio and expanding enterprise adoption, although its AI revenues are small compared to competitors [14] Comparative Growth Outlook - Both companies are leveraging AI, but Salesforce shows slightly stronger near-term growth potential, with consensus estimates indicating 9.53% revenue and 15.29% EPS growth for FY26 compared to Adobe's 9.5% revenue and 12.03% EPS growth [15] - Salesforce's earnings estimate revisions reflect a more bullish outlook from analysts compared to Adobe [15] Stock Performance and Valuation - Over the past three months, Salesforce's stock has declined by 9.8%, while Adobe's has dropped by 15.3%, indicating stronger investor confidence in Salesforce [19] - In terms of valuation, Salesforce trades at 4.67 times forward 12-month sales, slightly lower than Adobe's 4.74 times [20] Final Assessment - Salesforce is positioned as a stronger investment option due to its clearer path to monetizing AI, stronger customer retention, and better margin stability compared to Adobe [23] - Salesforce holds a Zacks Rank 2 (Buy), while Adobe has a Zacks Rank 3 (Hold) [24]