ServiceNow (NOW Quick QuoteNOW - Free Report) and Salesforce (CRM Quick QuoteCRM - Free Report) are two of the most important enterprise cloud software companies, helping large organizations modernize operations, automate workflows and manage critical business processes.

While both benefit from long-term digital transformation trends, their business momentum and execution profiles differ meaningfully. For investors trying to choose between these two software leaders, a closer look at their fundamentals, growth outlook and risks helps determine which stock currently offers a stronger investment case.

The Case for ServiceNow Stock

ServiceNow has been benefiting from the rising adoption of its workflows by enterprises undergoing digital transformation. The company expects to achieve $1.5 billion in AI revenues in 2026, on the back of rising adoption of ServiceNow's AI products, such as Now Assist, across its customer base, where customers are deploying AI faster and on a much larger scale.

Deals including three or more Now Assist products grew nearly 70% year over year in the first quarter, suggesting that customers are expanding AI usage across multiple workflows rather than testing a single AI feature. This bodes well for ServiceNow's prospects as customers are increasingly moving from AI pilots to full production deployments across their organizations and are now investing in AI across multiple business functions.

Now Assist is also helping ServiceNow grow other AI products. The company stated that adoption of Now Assist is driving demand for AI Control Tower and RaptorDB Pro. In the first quarter, AI Control Tower average deal sizes more than doubled sequentially, while RaptorDB Pro deal volume increased 80% year over year. Rising customer adoption and higher AI revenue expectations are positioning Now Assist to become an important driver of ServiceNow's AI growth strategy.

However, ServiceNow is integrating several acquisitions at the same time, including Moveworks, Armis, Veza and Pyramid Analytics. As a result of its back-to-back acquisitions, ServiceNow will need to integrate the acquired products, employees, technologies and sales teams into its existing business. As a result, the company will incur higher costs. These costs are expected to hurt the company's profitability before the benefits of synergies from acquisitions are fully realized.

For instance, the Armis acquisition is also expected to put pressure on profitability in 2026. Management expects Armis to reduce 2026 subscription gross margin by 25 basis points, operating margin by 75 basis points and free cash flow margin by 200 basis points. For the second quarter of 2026, Armis is expected to reduce its operating margin by 125 basis points. If customer adoption is slower than expected, the revenue contribution from these businesses could take longer to materialize.

The Case for Salesforce Stock

Salesforce's Agentforce platform is becoming one of the company's key growth drivers as customers increase spending on AI-powered products. Agentforce's annual recurring revenues (ARR) exceeded $1 billion in the first quarter of fiscal 2027, making Agentforce one of Salesforce's fastest-growing businesses. The strong momentum can be attributed to customers who are moving beyond AI pilots and deploying the technology in production.

Agentforce is also helping Salesforce generate larger deals. The company closed a record 98 deals worth more than $1 million in new annual contract value during the first quarter. Management stated that demand for Agentforce, Data 360 and Slack was a major contributor to this performance.

Customer expansion remains another important driver. About 50% of Agentforce and Data 360 bookings came from existing customers who increased their spending with Salesforce. Management noted that its top 10 customers by Agentforce usage increased their overall Salesforce spending by 1.5 times over the past year.

Usage trends indicate that adoption is still growing. During the first quarter, Salesforce processed 28.6 trillion AI tokens, up 152% sequentially, and generated 3.8 billion agentic work units, up 111% sequentially. Agentforce is being used across customer service, sales, IT and other business functions. Salesforce's own support organization has used Agentforce to handle more than four million customer inquiries.

The platform is also supporting growth across Salesforce's broader business. Bookings for premium AI offerings grew nearly 60% year over year in the first quarter. With Agentforce ARR exceeding $1 billion, along with growing customer adoption, the platform remains one of the key growth drivers for Salesforce and continues to play an important part in the company's long-term AI strategy.

NOW vs. CRM: Earnings Estimate Trend

The earnings estimate revision trend for the two companies reflects that analysts are turning more bullish toward CRM.

The Zacks Consensus Estimate for NOW’s 2026 and 2027 EPS is pegged at $4.14 and $5.01, respectively. The estimates for 2026 and 2027 have remained unchanged over the past 30 days.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for CRM’s fiscal 2027 and 2028 EPS is pinned at $14.12 and $15.49, respectively. The estimates for fiscal 2027 and 2028 have both been revised upward by 7.6% and 5.5%, respectively, over the past 30 days.

Image Source: Zacks Investment Research

NOW vs. CRM: Price Performance and Valuation

Year to date, shares of NOW and CRM have plunged 33.3% and 37.4%, respectively.

NOW Vs. CRM: YTD Price Return Performance

Image Source: Zacks Investment Research

Currently, CRM is trading at a forward sales multiple of 2.85X, lower than NOW’s forward sales multiple of 6.02X. CRM’s reasonable valuation makes it more attractive for investors looking for value and stability.

NOW vs. CRM: Forward 12-Month P/S Ratio

Image Source: Zacks Investment Research

Conclusion: CRM Has an Edge Over NOW

Both ServiceNow and Salesforce are well-positioned to benefit from the AI wave. However, ServiceNow faces near-term risks, such as dilutive impact on margins as a result of its back-to-back acquisitions, which could hurt the company’s prospects in the near term.

In contrast, Salesforce shows steadier execution, where the company is witnessing strong adoption of its AI products and its earnings estimates are being revised upward. CRM’s reasonable valuation offers some downside protection as well, giving CRM a clear edge over NOW.

Currently, CRM carries a Zacks Rank #3 (Hold), giving the stock a clear edge over NOW, which has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.