The New AI Darlings: Why Software Stocks Are Taking the Lead

For the past year, AI hype has been all about hardware. Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), Broadcom (NASDAQ: AVGO) — if it had anything to do with AI chips, it skyrocketed. 

But something interesting just happened. The market is shifting.

When DeepSeek's new AI model dropped last week, the reaction was telling. Chip stocks, the golden children of the AI boom, sold off heavily, with NVDA down double digits in a single day. Meanwhile, software names like Salesforce (NYSE: CRM) actually traded higher. 

That’s because investors are starting to realize the next big AI play isn’t just in the hardware. It’s in the companies actually using AI to transform business. 

And Salesforce is leading that charge … Here’s why it has a Zen Rating of B, or Buy. 

A message from our sponsors...

Here's precisely how to capitalize on a booming copper market in 2025

Copper is booming with copper stocks setting up to be this year's big winner. Particularly the small-caps with high-grade projects in safe mining jurisdictions. This small-cap mining firm has around a billion pounds of copper already confirmed in mining-friendly Canada. It doesn't get any safer than that. Plus, shares are currently trading undiscovered around 10-cents.

Don't miss the free report.

Thanks to our sponsors for keeping this content free.

The Rise of AI Agents (And Why CRM Is Leading the Pack)

Salesforce has spent the last two decades building one of the most powerful enterprise software ecosystems in the world. Now, it’s bringing AI deeper into the mix with Agentic AI — an emerging field of AI that moves beyond simple chatbots and into digital agents that can autonomously perform tasks, collaborate, and make decisions.

This isn’t just hype. Salesforce just launched Agentforce, an AI-powered platform designed to help businesses deploy AI agents that can handle everything from sales and marketing automation to customer service and financial workflows. 

Instead of just predicting outcomes (like past AI tools), these agents can take action, proactively resolving issues, optimizing workflows, and improving efficiency.

Why does this matter? Because while everyone’s been chasing the hardware boom, the real money is in software. And Salesforce is already deeply embedded in the corporate world, making it the natural landing pad for AI-driven automation.

Why CRM Is Positioned to Win

Recurring Revenue & Strong Fundamentals – Unlike speculative AI stocks, Salesforce has a solid foundation. It’s a cash-generating machine with a massive installed customer base and a wide economic moat.

We can see this in CRM’s earnings and earnings growth:

• CRM's earnings have grown faster (44.09% per year) than the US market average (24.92%)
• CRM's earnings growth is accelerating - its growth over the last year (131.2%) is above its 5-year compound annual rate (44.09%)

AI Adoption at Scale – Companies are scrambling to integrate AI, and Salesforce’s platform is a plug-and-play solution. Businesses can deploy AI agents without having to rebuild their entire tech stack.

With over 150,000 companies globally leveraging its platform, Salesforce is already the undisputed leader in the customer relationship management (CRM) space … and it can easily roll out or cross sell new AI solutions to these customers. 

The Shift from Hardware to Software – AI hardware requires massive capex to get ahead and retain a moat. It’s also more cyclical, as chips may be in high demand now … but what about when the infrastructure is fully built out, or even overbuilt? The real value may be in the software or application layer … which is capital light and less cyclical due to SaaS subscription models. That’s where Salesforce dominates.

The Valuation Question

Salesforce has run up about 50% over the past three months. 

At 32x forward earnings, it’s not exactly cheap … but it’s still cheaper than many other AI software names on a book value basis:

• CRM is good value based on its book value relative to its share price (5.89x), compared to the US Software - Application industry average (8.15x)

That’s one reason it ranks a C for Value according to our Zen Rating Component Grades. However, it achieves a B in Financials and Momentum. To see our full ratings scorecard, along with analyst insights and more for CRM, click here. 

Bottom Line

The AI trade is evolving. While chip stocks are cooling off, software is heating up—and Salesforce is positioned as one of the biggest winners of the next AI wave. If the market is shifting from hardware to software, CRM might be one of the best ways to play it.

Click here to see CRM stock fundamentals.

What to Do Next?

• Watch “Zen Ratings Revolution” to Unlock +32.52% Annual Gains >
• Upgrade Your Investing - Start Your Premium Trial Now! >
• Discover Zen Investor portfolio to Find More 100%+ Stock Winners>

Want to get in touch? Email us at news@wallstreetzen.com.