AI Orchestration: Why ServiceNow and Salesforce May Lead the SaaS Recovery

The software-as-a-service (SaaS) sector is currently navigating a challenging bear market as investors question whether generative AI will erode the competitive moats of traditional software vendors. Concerns center on the rise of agentic AI coding tools and the potential for reduced seat-based licensing as AI agents begin to replace human workers. However, a divide is emerging between simple user-interface wrappers and 'systems of record.' While AI can generate code rapidly, quality remains a significant concern; a study by Alibaba indicated that 75% of AI-generated code failed within a year. This suggests that enterprises will continue to rely on established vendors to maintain the stability and security of their core systems. ServiceNow (NYSE: NOW) is positioned as a primary AI orchestration layer. With revenue growth hovering around 20%, the company's configuration management database (CMDB) serves as the technical heart for many clients. Based on a 10x price-to-sales multiple, some projections suggest a target price of $160, implying an upside of over 85%. Similarly, Salesforce (NYSE: CRM) has pivoted to become a master of records for customer data. By breaking down departmental silos, the company is positioning its platform as a launchpad for AI agents, moving beyond traditional CRM functions to integrate deeper into the agentic AI ecosystem. The transition from seat-based pricing to consumption-based or hybrid models is expected to be the next major evolution for these firms. Those that control the underlying data and workflow orchestration are likely to capture the most value from the AI transition.