Nvidia paid a high 80x revenue multiple for Hugging Face not for its direct revenue, but to control a key strategic asset. Owning the dominant open-source model hub ensures that the ecosystem of models developed and distributed will continue to run optimally on and drive demand for Nvidia's chips.
Despite record growth, Nvidia's P/E multiple is below the market average. This is because the stock's stability attracts institutional investors who hold for the long term, rather than swing traders seeking volatility. This lack of trading churn prevents the multiple from expanding to levels typical of high-growth tech stocks.
Salesforce's Cloudforce partnership is a strategic reversal. Instead of embedding AI into its UI, it allows Anthropic's Claude to be the primary interface for accessing Salesforce data. This signals Salesforce is not afraid of being disintermediated and believes the ultimate value lies in its data platform, not its user-facing application.
Salesforce CEO Marc Benioff is signaling a move beyond seat-based or usage-based pricing towards an outcome-based model. This would tie the software's cost directly to the value it creates, such as a percentage of revenue generated or costs saved by the customer, a model pioneered by companies like Palantir.
The decline in Salesforce's Tableau business unit highlights a direct threat from AI. Generative AI is becoming increasingly proficient at data visualization, analysis, and dashboarding—Tableau's core functions. This makes Tableau a prime example of an established software category being actively cannibalized by new AI capabilities.
The jump in software stocks like ServiceNow and Salesforce isn't due to stellar results, but because performance exceeded pessimistic expectations. Multiples had priced in a scenario of negative free cash flow growth. Merely stable results provide significant relief, triggering an outsized positive stock reaction.