Why Salesforce Was Rallying Again Today

Shares of enterprise software giant Salesforce (NYSE: CRM) rallied on Monday, up 9.5% as of 1:30 p.m. EDT.

Salesforce rallied along with many other software-as-a-service companies today, after Nvidia (NASDAQ: NVDA) CEO Jensen Huang made positive comments about the future of software stocks at a Computex presentation in Taiwan this morning.

In addition, Salesforce issued a press release, outlining that the company was heavily leaning into expansion in France.

Those two factors sent shares up strongly today.

Jensen throws some love to software stocks

During his keynote address today in Taiwan, Jensen Huang said it was "an incredible time" to be a software company. His reasoning was that agentic AI will increase the use of software tools so much that relevant enterprise software companies are likely to see a massive step-up in activity, which they will likely find ways to monetize. Huang went on:

A lot of people have said, Jensen, agentic AI is coming; therefore, all of the software companies are going out of business. I said: It's exactly the opposite. Because there will be so many agents, the world is no longer limited by the number of people. Therefore, those agents will use more tools than ever.

Salesforce has definitely come under pressure this year, along with the rest of the sector, amid fears of AI disruption, especially after the introduction of Anthropic's Claude Code back in February.

But with the stock down this much and Salesforce now trading at roughly 15 times this year's earnings estimates, its lowest valuation in years, any indication that software companies can survive or even thrive in the age of AI, perhaps by transitioning to usage-based pricing, is bound to result in a stock rally.

In addition to the positive commentary, Salesforce also issued a press release today announcing that it would invest an additional $2 billion in France through 2030. The new announcement comes on top of a previous $3.5 billion investment, and will go toward a new AI innovation hub and AI education in the country.

A press release like this wouldn't normally move the needle, but the fact that Salesforce apparently feels comfortable enough to invest more cash through 2030 could be taken as a sign of confidence in its AI future.

Image source: Getty Images.

Salesforce is among the cheapest of the "SaaS-pocalypse" victims

Salesforce has been the most aggressive large software company in repurchasing its stock amid this year's "SaaS-pocalypse," with a massive $25 billion accelerated share repurchase last quarter.

That showed a lot of confidence in the company's future, as did today's investment in France. If Huang turns out to be right and Salesforce can successfully transition to a usage-based model, that aggressive buyback could look prescient.

Billy Duberstein and/or his clients have positions in Salesforce. The Motley Fool has positions in and recommends Nvidia and Salesforce. The Motley Fool has a disclosure policy.