Nvidia CEO Jensen Huang Predicts AI Upside for Software Sector: Two Stocks Poised for Recovery

Key Points

• Veeva Systems and Adobe are two prominent software companies that have recently experienced significant share price declines.

• Despite recent market volatility, both firms continue to post robust financial results and are successfully integrating AI into their offerings.

• Current valuation levels may present a compelling entry point if these companies successfully navigate recent headwinds.

Wall Street has maintained a bearish outlook on the software sector. Many analysts fear that artificial intelligence (AI) will disrupt the industry, potentially making existing software products and services obsolete. However, Jensen Huang, the CEO of Nvidia (NASDAQ: NVDA), offers a different perspective. During a recent technology conference, Huang suggested that rather than replacing software, AI will likely enhance and empower it, making this an advantageous era for software companies. If his outlook holds true, beaten-down software stocks could be positioned for a significant rebound. Two notable candidates for consideration are Veeva Systems (NYSE: VEEV) and Adobe (NASDAQ: ADBE).

Image source: The Motley Fool.

1. Veeva Systems

Veeva Systems is a leading Software as a Service (SaaS) provider specializing in cloud-based solutions for the life sciences industry. The company has secured a dominant position in its niche by developing highly specialized products that address the unique challenges of pharmaceutical and medical device companies. These clients must navigate complex regulatory environments, manage high R&D costs, and maintain strict data integrity and privacy standards.

Veeva’s specialized services make it an essential partner for the industry, with 15 of the top 20 biopharmaceutical companies currently utilizing its platform. Despite the recent dip in its stock price, Veeva’s fundamentals remain strong. In its first fiscal quarter of 2027, ending April 30, revenue rose 16% year-over-year to $882.9 million, while adjusted earnings per share (EPS) grew to $2.24, up from $1.97 in the previous year.

The company is actively embracing the AI revolution through the launch of Veeva AI, an agentic AI system designed to automate complex workflows specifically for the life sciences sector. With a total addressable market estimated at over $20 billion compared to its current trailing-12-month revenue of $3.3 billion, Veeva has significant room for expansion. Furthermore, the high switching costs associated with its integrated services create a strong competitive moat, suggesting the stock could provide substantial returns as it integrates AI into its growing ecosystem.

2. Adobe

Adobe is another major SaaS player that has seen its stock price pressured over the past year, partly due to internal leadership transitions. While some skeptics argue that generative AI could render Adobe’s creative tools redundant, the company’s financial performance suggests otherwise. Rather than being replaced, Adobe appears to be evolving alongside the technology.

In the second quarter of fiscal year 2026, ending May 29, Adobe reported record revenue of $6.62 billion, a 13% increase year-over-year. Adjusted EPS rose nearly 18% to $5.96. The company also demonstrated strength in its forward-looking metrics, raising its adjusted EPS guidance for the fiscal year and maintaining a robust $22.27 billion in Remaining Performance Obligations.

Adobe’s strategic integration of AI is already yielding measurable results. During its most recent earnings call, management highlighted that AI innovation has driven a threefold year-over-year increase in “AI-first” Annualized Recurring Revenue (ARR), which now exceeds $500 million. This rapid adoption, combined with high customer retention driven by switching costs, makes Adobe a strong candidate for investors looking to capitalize on AI-driven growth during market pullbacks.

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