Prepared Remarks
Equity Investor, Macro Commentary
Workday, Salesforce and ServiceNow are the largest and easiest software shorts to fund a semiconductor trade, because none can be acquired and none offers real upside surprises. Margin upside is now a negative, since they should be reinvesting to avoid being eaten by AI. @TheNarrenschiff adds that if Workday can't rally on a strong print and bullish call comments, it can't rally. x.com x.comÂ
Okta, Salesforce and Atlassian look insanely expensive at nine times forward revenue against roughly 10% year-over-year growth. Many SaaS firms also have high sales and marketing costs. A commenter flags inference spending, which SaaS investors worry could compress margins; if free cash flow, growth, retention or gross margins weaken, their price-to-sales multiples could collapse. x.com x.com x.com x.comÂ
Adobe trades at 2018 price levels even though revenue has grown nearly 200% since then, from $2.2B to $6.4B, and its $25B buyback on a $100B market cap amounts to a quarter of the company. The bottom may not be in yet, but the market won't ignore it forever. x.comÂ
Salesforce and Adobe still look massively undervalued even after the recent run. Salesforce trades at 18x forward earnings with $14.5B of trailing free cash flow, a 9% FCF yield, raised FY27 guidance of $46.1-46.4B and AI/Data ARR of about $3.9B, up 210%. Adobe trades at 10.6-11.2x forward earnings and 11x free cash flow on $10.3B of FCF, with a 0.8 PEG, 89% gross margin and 42% FCF margin. x.comÂ
Salesforce looks less attractive than ServiceNow at this point, making a rotation from Salesforce into ServiceNow worth considering. x.comÂ
Adobe is a bit undervalued, though not significantly, at 13x earnings with 13% revenue growth. Its falling profit margin is concerning, and AI threats are growing as image generation improves. x.comÂ
Adobe, Salesforce and ServiceNow still generate massive cash flow, push deeper into AI and sit at the center of enterprise operations. Three of the biggest SaaS names remain beaten up in 2026; their valuations have been crushed, but the long-term opportunity may not have been. The market has swung way too far against them. x.comÂ
Adobe is not re-accelerating: management guides growth down to 9-10% with operating margins falling, and more pressure lies ahead. That makes buying every dip at about 16x earnings a mistake, even as @qualtrim points to 12% revenue growth and a 47.4% operating margin. x.com x.comÂ
Salesforce faces real AI threats: more competition, margin headwinds from compute costs and disruption risk for businesses like Tableau and Service Cloud. Agentforce is showing some momentum, and the stock felt oversold earlier, but it is not attractive at current levels. x.comÂ
Salesforce's poor M&A is literally half the reason its multiple stays low. Slack and Informatica are cited as examples, with Braze raised as a question; AI making Tableau obsolete in a few years would be a separate risk, not itself poor M&A. x.comÂ
Salesforce's $25 billion accelerated buyback leans on debt in a way that risks leveraging its future, as happened at Fiserv. Fiserv cut its share count 21.5% with debt-funded buybacks averaging $167 a share, and now trades under $60 as growth fell. Salesforce can afford this round with $14 billion of free cash flow, but growth is slowing to single digits, AI isn't yet transforming its ecosystem, and its goodwill-heavy book limits deals. The risk is that multiples compress and it doubles down. … Show more