Should You Buy Salesforce Stock Instead of Oracle Stock? | CRM Stock Analysis | ORCL Stock Analysis

SUMMARY

Parkev Tatevosian, CFA, compares Salesforce and Oracle, analyzing their revenue growth, profitability, capital expenditures, risk factors, and valuations. He concludes that while both stocks are undervalued, Salesforce offers a more attractive investment opportunity due to its cheaper valuation and asset-light business model.

MAIN POINTS

• Oracle and Salesforce have experienced significant share price declines in 2026, with Oracle down 28% and Salesforce down 37%. [0:00]
• Oracle's revenue growth is accelerating while Salesforce's is decelerating, and Oracle is heavily investing in infrastructure to support customers like OpenAI. [1:01]
• Salesforce's profitability has improved significantly since late 2022, while Oracle maintains a higher operating profit margin. [2:00]
• Oracle's capital expenditures have soared, with a CAPEX to revenue ratio of 82.6%, while Salesforce remains asset-light with a ratio of just 1.3%. [3:02]
• Both companies face significant but different risks: Oracle's reliance on OpenAI and Salesforce's exposure to evolving AI technologies and changing business models. [4:02]
• Valuation metrics show both stocks are trading at historically low levels, with Salesforce appearing especially undervalued relative to its fair value. [6:02]

DETAILED ANALYSIS

In 2026, both Oracle and Salesforce have seen notable declines in their share prices, prompting investors to reassess their prospects. Oracle's revenue growth has accelerated, reaching $67.4 billion in the trailing twelve months, while Salesforce's revenue growth has slowed to $42.8 billion. Oracle's strategy involves substantial investment in infrastructure, particularly data centers, to support major clients like OpenAI.

This approach has led to a dramatic increase in Oracle's capital expenditures, with a CAPEX to revenue ratio of 82.6%, a figure far exceeding typical industry levels. In contrast, Salesforce operates with an asset-light model, reflected in its declining CAPEX to revenue ratio of just 1.3%.

Profitability trends have shifted since late 2022, when both companies responded to recession fears and rising interest rates by cutting jobs. Salesforce's operating profit margin has improved markedly, rising from single digits to 22%, while Oracle maintains a higher margin at 33.3%. However, Oracle's heavy capital spending introduces risk, especially given its reliance on OpenAI, a customer facing financial and competitive pressures from rivals like Anthropic.

Salesforce, meanwhile, faces the potential threat of AI-driven disintermediation, as advances in artificial intelligence and agentic AI could enable companies to develop their own customer relationship management solutions. Despite this, the likelihood is seen as low, with AI more likely to enhance rather than replace Salesforce's offerings. The shift from a seat-based to a consumption-based pricing model, driven by increased employee productivity, could also impact Salesforce's margins.

Valuation analysis reveals both stocks are trading at historically low forward price-to-earnings ratios, with Oracle at 17.5 and Salesforce at 11.8. Discounted cash flow models suggest both are undervalued: Oracle's market price of $140 per share is well below its calculated fair value of $219, and Salesforce trades at $167 against a fair value of over $290. While both are considered buying opportunities, Salesforce is favored due to its lower valuation and less capital-intensive business model.

LINKS

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• Parkev Tatevosian's book on evaluating publicly traded companies.
• Fiscal.ai investment research platform with a viewer discount.
• Webull investing platform with bonus shares offer.
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