Apple vs Salesforce: AI Monetization Sets Up Contrasting Bets

Apple and Salesforce delivered strong earnings reports last week, but the numbers tell different stories. Apple's record-breaking June quarter was driven by demand for iPhones and Macs, with revenue rising 16.36% year-over-year to $109.42 billion.

Salesforce, on the other hand, reported a more nuanced performance. Revenue grew 10.83% to $11.35 billion, but non-GAAP EPS beat expectations by 80%, largely due to strategic investment gains. If these gains are stripped out, Salesforce's operating story still looks strong, with cRPO of $33.5 billion up 14% and Agentforce ARR crossing $1.5 billion.

Apple trades at a steep premium to Salesforce, with a forward earnings multiple of 33 compared to CRM's 19. The two companies also have different approaches to artificial intelligence (AI), with Apple treating AI as a device feature and Salesforce charging directly for agents. Salesforce is guiding towards strong growth in AI ARR, which could reset the comparison between the two stocks.

One analyst leans towards Salesforce, citing its more asymmetric risk/reward profile and potential for AI ARR growth to compound off a bigger base. However, they also caution that if AI ARR growth decelerates below triple digits, their view may change.