During the August 31 episode of Mad Money, Jim Cramer examined the sharp rotation back into enterprise software following the forced unwinding of bearish hedge fund positions. Mentioning Veeva Systems Inc. (NYSE:VEEV) and Salesforce, Inc. (NYSE:CRM) as examples of sector leaders, he commented:
Situational Awareness just despised enterprise software and Veeva Systems, number three, up 40%, is enterprise software writ large for the healthcare industry. I think it’s bounced back in conjunction with all the other enterprise software companies that Situational Awareness believed would be destroyed by AI that haven’t been. Once that hedge fund blew up, the whole group came roaring back as Situational was no longer there to put pressure on them. Hey, Salesforce had a similar rally, up nearly 40%. Now, here’s one that openly took on the short sellers first with rhetoric and then with numbers which have not been hurt at all by… the SaaS-pocalypse. His blowout quarter obliterated the shorts. I don’t think they still know what hit them.
Dispelling the AI Obsolescence Myth
For months, bearish macro funds aggressively shorted enterprise software providers, on the belief that emerging artificial intelligence platforms would easily replicate proprietary workflows and trigger severe pricing compression.
Salesforce, Inc. (NYSE:CRM) and Veeva Systems Inc. (NYSE:VEEV) proved the exact opposite. Salesforce showed that autonomous enterprise features act as expansion engines. Similarly, Veeva Systems, which powers critical clinical and commercial operations for the heavily regulated life sciences sector, integrated advanced data capabilities directly into its platform. Rather than cannibalizing software licenses, artificial intelligence features reinforced the massive switching costs embedded in both platforms.
Valuation Multiples and Growth Constraints
Despite solid execution, market skeptics continue to scrutinize the growth limits and valuation multiples of both companies. Salesforce, Inc. (NYSE:CRM) trades at a forward P/E of 19x, showing market hesitation over macroeconomic budget tightening and the necessity for the company to rapidly monetize its heavy artificial intelligence investments.
Veeva Systems Inc. (NYSE:VEEV) trades at a higher premium, holding a forward P/E of 31.85. While this sits well below Veeva’s multi-year historical averages, the company faces a unique, self-inflicted bear case, which is, a looming platform war with Salesforce.
After relying on Salesforce, Inc.’s (NYSE:CRM) architecture for over a decade, Veeva Systems Inc. (NYSE:VEEV) is migrating its entire customer base onto its proprietary Vault CRM with support for the legacy product scheduled to end in December 2029. In response, Salesforce launched its competing Life Sciences Cloud, turning a long-time partner into a direct, well-resourced rival. Forcing major pharmaceutical enterprises to undergo a massive CRM migration creates a dangerous window for competitive friction, which could give Salesforce an opening to apply pricing pressure or capture market share as legacy contracts expire.
Institutional Holdings and Short Position Dynamics
According to Insider Monkey’s Q2 data, institutional sentiment surrounding both software providers showed stability despite the broader sector volatility. Veeva Systems Inc. (NYSE:VEEV) was held by 61 hedge funds in the second quarter, down from 62 funds in the prior quarter, which shows that institutional managers largely maintained their core exposure through the macro pullbacks. Salesforce, Inc. (NYSE:CRM) saw similar institutional resilience, with 99 hedge funds maintaining positions compared to 101 funds in the preceding period.
Short interest metrics further highlight that neither stock was heavily targeted by bears, with Salesforce maintaining a short float of 3.74% and Veeva Systems at 3.93%. Rather than being driven by a mechanical short squeeze, the sharp rallies show a broad institutional rotation back into stable enterprise software.
The recent rallies in Salesforce, Inc. (NYSE:CRM) and Veeva Systems Inc. (NYSE:VEEV) highlight a clean break from the panic that previously plagued the software sector. As distressed short-term capital stepped aside, the market returned to valuing predictable recurring revenue, expanding margins, and deep customer lock-in. For institutional backers, both stories support that generative artificial intelligence is not destroying enterprise platforms. Instead, it serves as an engine for broader platform growth.
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