Several leading software companies have reported strong financial results recently, fueled in part by advances in artificial intelligence (AI) integration, underscoring the sector’s continued resilience amid ongoing technological shifts.
Salesforce, a major player in enterprise software, disclosed better-than-expected sales and profits last month and raised its outlook, attributing growth partly to AI-driven enhancements. The company announced an expanded partnership with AI developer Anthropic to integrate Anthropic’s Claude model into Salesforce’s platform. The initial rollout includes a plug-in enabling Salesforce users to leverage Claude’s reasoning capabilities on corporate data and automate certain sales functions, aiming to improve operational efficiency. Anthropic’s CEO, Dario Amodei, highlighted the deal as a way to embed Claude “into the systems where much of the world’s commercial activity happens.” Following the earnings release, Salesforce’s shares surged over 22%.
Other software firms also cited AI as a factor behind their recent strong performance. ServiceNow, which provides IT support and business process automation, reported robust sales growth in July. Snowflake, specializing in data storage and software, identified AI as a driver in raising its full-year sales forecast. Workday, known for human resources software, reported solid results, noting increased adoption of its AI-powered agents.
Despite these positive trends, industry observers caution that the corporate software market may face disruption as emerging AI-focused companies seek to gain ground. Anthropic and OpenAI have drawn attention for eyeing corporate software as a lucrative market, especially as they prepare for potential initial public offerings (IPOs) with ambitious growth plans. However, analyst Gil Luria of D.A. Davidson suggested in a recent note that Anthropic may find the corporate software sector too limited, given that its revenue already surpasses that of Salesforce. Collaborating with Salesforce could help Anthropic retain customers wary of newer, lower-cost, open-weight AI models gaining traction.
Looking ahead, established software firms may confront challenges from software-as-a-service (SaaS) providers designed from inception to leverage AI, potentially prompting shifts in contract structures and pricing models tied more closely to business outcomes, according to Gartner analyst Arun Chandrasekaran. Nonetheless, Chandrasekaran emphasized the complexity of replacing entrenched software ecosystems, noting that most corporate clients are operators rather than engineering organizations, and integrating new AI-generated code is technically demanding.
This operational inertia provides incumbent software companies additional time to adapt to AI advancements. OpenAI CEO Sam Altman observed recently that industry disruption has proceeded more slowly than anticipated, largely because established habits and workflows are resistant to rapid change.
Despite the pressures and uncertainties, Salesforce’s current valuation appears attractive. Even after its post-earnings surge, shares trade near 15 times forward earnings, markedly below its decade-average valuation of 43 times and beneath the average multiple of 24 times seen in a software-focused S&P index. This suggests investors recognize both the sector’s immediate opportunities and the challenges posed by AI-driven transformation.
Overall, AI is reshaping the corporate software landscape but has yet to supplant traditional software providers, which remain integral to complex IT environments across large organizations.