Salesforce and ServiceNow Vie for Dominance in Application Layer

Salesforce and ServiceNow are both vying for dominance in the application layer as capital flows out of AI hardware. Salesforce reported $11.13 billion in revenue, up 13%, with non-GAAP operating margin of 34.8% and operating cash flow of $6.7 billion. The company's Agentforce and Data 360 units contributed $3.4 billion to AI and data annual recurring revenue (ARR).

Salesforce CEO Marc Benioff sees agentic AI as a major growth opportunity for the company, while ServiceNow has achieved a $1 billion AI Annual Contract Value (ACV) milestone and acquired several security-focused companies.

ServiceNow's subscription revenue grew 24.5% year-over-year to $3.877 billion, with 123 net-new-ACV deals over $1 million and agentic deployments increasing ninefold in nine months. However, the company's operating income fell 54.75% due to amortization expenses.

The two companies have different approaches: Salesforce is positioning itself as a comprehensive CRM platform, while ServiceNow is building an AI control tower that integrates with various workflows and systems. Both stocks have been impacted by market fluctuations, with Salesforce down 22.05% year-to-date and ServiceNow down 15.30%.