Jensen Huang Says Software Companies Are About to Benefit From AI. These 2 Stocks Could Win Big

Veeva Systems reported Q1 fiscal 2027 revenue of $882.9 million, up 16% year over year, with adjusted EPS of $2.24 versus $1.97 a year ago. Adobe posted Q2 fiscal 2026 revenue of $6.62 billion, up 13%, and adjusted EPS of $5.96, up nearly 18%, while raising full-year adjusted EPS guidance. The article is broadly bullish on both stocks as AI adoption and strong fundamentals could support a rebound, though the piece is opinion-driven rather than a new company-specific catalyst.

Analysis

The market is still pricing AI as a displacement threat for horizontal software, but the more important near-term dynamic is that embedded AI tends to expand workflow usage before it commoditizes pricing. That favors category leaders with high switching costs and deep process integration like VEEV and ADBE, because AI can increase task volume and seat penetration faster than it erodes gross retention. The second-order winner is not necessarily the AI model vendor; it is the application layer that owns the customer relationship and distribution.

The key contrarian point is that both names are being de-rated on narrative risk rather than evidence of fundamental decay. If AI adoption is additive, current weakness creates a setup where multiple compression could reverse before earnings acceleration fully shows up, especially over the next 2-4 quarters. For VEEV, the white-space story is more important than the current revenue base; for ADBE, monetization of AI features is the catalyst that can re-anchor growth expectations even if legacy creative workflows face some pressure.

The main risk is that investors underestimate how long it can take for AI features to translate into net retention or ARR inflection, which means these can remain “cheap” for months before the market pays for the optionality. Another risk is execution: if AI is perceived as defensive add-on packaging rather than a differentiated product layer, the market may keep applying a lower terminal growth rate. That said, the downside looks more valuation- and sentiment-driven than fundamental so long as cohort quality and guidance remain intact.

Key Decisions for Investors

• Go long VEEV on a 3-6 month horizon on weakness: favor a staged entry rather than chasing, because the rerating will likely come from continued beat-and-raise behavior, not a single catalyst. Risk/reward is attractive if the market stops discounting AI as a disruption and starts treating it as workflow expansion.
• Go long ADBE over a 6-12 month horizon via stock or call spreads, using the current drawdown as entry. Best case is multiple expansion on AI monetization; worst case is a slow grind if AI revenue growth fails to accelerate, so structure for asymmetric upside.
• Pair trade: long VEEV / short a basket of lower-moat software names with weaker switching costs over the next 1-2 quarters. The thesis is that AI favors firms embedded in mission-critical workflows, while generic software faces higher churn and pricing pressure.
• Use NVDA as a hedge, not a core expression: if AI infrastructure spending re-accelerates, that can validate the application-layer thesis, but NVDA’s beta may swamp the relative-view trade. Keep it small and tactical.
• Avoid aggressive shorting of VEEV or ADBE until there is evidence of decelerating retention or guidance cuts. The market is already skeptical, so the asymmetry favors waiting for fundamentals to break rather than front-running an AI-disruption narrative.