It was a tale of two AI cities when Nvidia and Salesforce on Wednesday reported the January-quarter earnings that ended their 2026 fiscal years. Nvidia kept its place at the top of the class, reporting better than projected 73% revenue growth. Net income rose 94% to $42.9 billion. For the full fiscal year, Nvidia had revenue of $216 billion and net profit of $120 billion, translating to a margin of 55.6%, which is impressive for a chip designer. By comparison, distant rival AMD’s net profit margin for the last 12 months was 12.5%, while Broadcom (a rival of a sort) had a margin of 36.2%, according to S&P Global Market Intelligence data. But even as Nvidia bulls celebrated the moment—pushing the long-stalled stock above $200—uncertainties about the impact of AI on enterprise software surfaced in Salesforce’s results. On the surface, the quarter looked fine. Revenue grew 12%, which is nothing to write home about but a big improvement on the 8.6% year-on-year growth in the first three quarters of the year. Scratch the surface, though, and the picture isn’t quite as positive. If you exclude the contribution from Salesforce’s recently acquired Informatica, the quarter’s growth rate was only 8%. No one wants to see Salesforce too reliant on acquisitions for growth, as buying other companies isn’t a sustainable way to expand. That’s likely one reason why its stock fell 5% in after-hours trading.
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It was a tale of two AI cities when Nvidia and Salesforce on Wednesday reported the January-quarter earnings that ended their 2026 fiscal years. Nvidia kept its place at the top of the class, reporting better than projected 73% revenue growth. Net income rose 94% to $42.9 billion. For the full fiscal year, Nvidia had revenue of $216 billion and net profit of $120 billion, translating to a margin of 55.6%, which is impressive for a chip designer. By comparison, distant rival AMD’s net profit margin for the last 12 months was 12.5%, while Broadcom (a rival of a sort) had a margin of 36.2%, according to S&P Global Market Intelligence data.
But even as Nvidia bulls celebrated the moment—pushing the long-stalled stock above $200—uncertainties about the impact of AI on enterprise software surfaced in Salesforce’s results. On the surface, the quarter looked fine. Revenue grew 12%, which is nothing to write home about but a big improvement on the 8.6% year-on-year growth in the first three quarters of the year. Scratch the surface, though, and the picture isn’t quite as positive. If you exclude the contribution from Salesforce’s recently acquired Informatica, the quarter’s growth rate was only 8%. No one wants to see Salesforce too reliant on acquisitions for growth, as buying other companies isn’t a sustainable way to expand. That’s likely one reason why its stock fell 5% in after-hours trading.
That’s not all, however. Salesforce is reporting accelerating revenue from its AI flagship product Agentforce—annualized recurring revenue reached $800 million in the quarter, up from $500 million in the third quarter. That’s heartening. The question is why Agentforce isn’t lifting Salesforce’s revenue growth rate. Indeed, Salesforce projected fiscal 2027 growth of between 10% and 11%—including three points coming from Informatica. That implies Salesforce’s growth without Informatica will be 7% to 8%, slightly weaker than the just-finished year excluding the acquired firm. Could the growth in AI be cannibalizing Salesforce’s older software businesses? That’s one of the worries about AI, of course—that businesses will embrace new AI-powered products but simply shift money they’re spending from other software they’re buying.
When asked about this issue, Salesforce CEO Marc Benioff gave a vague answer, preferring to emphasize his pride in what Salesforce had done. Earlier on the call, though, Chief Financial Officer Robin Washington had said Agentforce’s growth was expected to be offset this year by “weakness in marketing, commerce and [data analytics visualization unit] Tableau,” all issues that dampened last year’s performance as well. It’s also notable the company said it expected “organic revenue”—which comes from within existing businesses, rather than via acquisitions, to “reaccelerate” in the second half of the year. That all suggests at least some of the older businesses are not doing great right now.
There are few examples of software firms showing accelerating overall growth so far, even if they’re reporting fast-growing AI revenue. And in most cases, their AI revenue is tiny. Agentforce’s ARR, for instance, is just 1.7% of Salesforce’s total fiscal 2027 projected revenue of about $46 billion. To be sure, AI adoption within businesses is still in the very early days. But investors have good reason to be jittery about the future growth of software firms.
Nvidia’s Cash Machine
Nvidia generated $96.6 billion in free cash flow in fiscal 2026, the company’s January-quarter earnings revealed, up from $61 billion in fiscal 2025. Free cash flow is cash from its operations less capital expenditures, an expense Nvidia doesn’t have a lot of. Companies use the cash they generate for share buybacks, dividends, investments and acquisitions. It’s why Nvidia has the firepower to invest in a bunch of potential customers, as it has been doing.
It’s fun to compare Nvidia’s free cash flow with those of other tech giants, several of whom are Nvidia customers and therefore are responsible for the company’s explosive growth. In calendar year 2025, only Apple generated more in free cash flow—$123.5 billion. Alphabet’s free cash flow was $73 billion, Microsoft’s just a tad higher, Meta Platforms’ was $43.6 billion and Amazon’s $7.7 billion.
In Other News
• Bill Gates told staff of his charitable foundation that he’s sorry for maintaining a relationship with Jeffrey Epstein, but said he didn’t participate in any of Epstein’s crimes, The Wall Street Journal reported Wednesday.
• Bob McGrew, former chief research officer at OpenAI and an adviser to Thinking Machines Lab, is starting a new company that will build AI-powered software for manufacturing, The Information reported.
• General Atlantic is selling part of its stake in TikTok parent ByteDance at a $550 billion valuation, according to Reuters. The valuation would be a marked jump from the $330 billion the company was valued at in a share buyback last year.
• DoorDash said Wednesday it will cease operations of its Deliveroo and Wolt brands in Qatar, Singapore, Japan and Uzbekistan. The shutdowns come after a review of country-specific conditions, DoorDash said, and they aren’t expected to materially impact its outlook.
• Shares of Snowflake dropped more than 2% after its fourth-quarter earnings report. The cloud database provider forecast slower revenue growth for its current quarter and fiscal year compared to last year.
• Banking fintech company Chime said it expects to be profitable this year after revealing its revenue growth picked up pace over 2025.
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