Apple vs Salesforce: Which Stock Holds the Key to AI Growth

Apple and Salesforce recently reported their quarterly earnings, but beneath the surface, there's more to both stories than meets the eye. Apple posted a record-breaking quarter with $109.42 billion in revenue, up 16.36% year-over-year. The iPhone accounted for $54.3 billion of that total, with sales growing by 22%. Mac sales also saw significant growth, increasing by 29% despite supply constraints.

Salesforce's earnings report looked different, with a more complex narrative. Revenue reached $11.35 billion, up 10.83%, and non-GAAP EPS of $5.90 beat consensus estimates. However, a closer look reveals that roughly $2.53 per share came from strategic investment gains, which skews the operating story.

The main growth engine for Apple is its iPhone and Mac cycle, while Salesforce relies on Agentforce, Data 360, and Slack to drive revenue. The latter's AI ARR (annual recurring revenue) crossed $1.5 billion, up over 240% year-over-year. This discrepancy in valuation is striking, with Apple trading at a premium of 33 forward earnings versus Salesforce's 19.

One reason for this disparity lies in their differing approaches to artificial intelligence. Apple views AI as a device feature, whereas Salesforce is charging directly for agents and expects its AI ARR to reach $4 billion soon. Their capital return philosophies also diverge, with Apple returning $33 billion to shareholders in the quarter, while Salesforce finished a $25 billion accelerated repurchase.