Key Points

Veeva Systems and Adobe are two leading software companies whose shares have recently declined significantly.
However, they continue delivering strong financial results while incorporating AI into their services.
They could be great picks at current levels if they can bounce back from recent challenges.

Wall Street sentiment has turned cautious toward software firms. Some market participants argue that artificial intelligence will disrupt the sector by making many existing offerings unnecessary. Yet Nvidia CEO Jensen Huang offered a different view at a recent industry event. He noted that the current environment favors software companies because AI can enhance rather than eliminate their offerings. Should this outlook prove accurate, investors may find opportunities in software stocks that have pulled back but remain fundamentally sound. Two names stand out in this regard: Veeva Systems and Adobe.

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1. Veeva Systems

Veeva Systems operates as a SaaS provider focused on cloud solutions for life sciences organizations. It has established a strong position by developing specialized tools that address the unique requirements of its customers. Firms in pharmaceuticals and medical devices face complex regulations, long development cycles, data security concerns, and other hurdles. Veeva helps these companies manage such challenges effectively. This value has translated into a customer base that includes 15 of the top 20 biopharmaceutical companies. Despite recent share weakness, financial performance remains solid. For the first quarter of fiscal 2027, ended April 30, revenue rose 16 percent year over year to $882.9 million, while adjusted EPS increased to $2.24 from $1.97 in the prior-year quarter.

The company is adapting through AI. It introduced Veeva AI, an agentic platform built to streamline workflows while respecting the compliance needs of life sciences clients. Veeva also sees substantial room for expansion, citing a more than $20 billion addressable market against trailing twelve-month revenue of $3.3 billion. High switching costs further support its competitive position, as clients integrate its tools deeply into daily operations. These elements, combined with ongoing AI initiatives, position the stock for potential recovery and attractive returns from present valuations.

2. Adobe

Adobe has also faced investor selling pressure over the past year, partly due to leadership transitions. Nevertheless, core operations continue to perform well. The company leads in digital content creation and editing software. Concerns that generative AI could render its tools obsolete have not materialized in recent results. In the second quarter of fiscal 2026, ended May 29, revenue grew 13 percent year over year to a record $6.62 billion. Adjusted EPS rose nearly 18 percent to $5.96. Management lifted its adjusted EPS outlook for the full fiscal year. Remaining Performance Obligations stood at $22.27 billion, essentially flat from the prior quarter.

Adobe is integrating AI capabilities into its platform, and early results are encouraging. During the latest earnings call, executives highlighted a threefold year-over-year increase in AI-first annualized recurring revenue, now exceeding $500 million. Combined with durable competitive advantages from high switching costs, these developments support a constructive long-term view. The stock may therefore represent an appealing entry point for patient investors.

Should you buy stock in Veeva Systems right now?

Before you buy stock in Veeva Systems, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now, and Veeva Systems was not among them. The 10 stocks that made the cut could produce strong returns in the coming years.

Consider when Netflix made this list on December 17, 2004. If you invested $1,000 at the time of our recommendation, you would have $417,305. Or when Nvidia made this list on April 15, 2005. If you invested $1,000 at the time of our recommendation, you would have $1,293,148.

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Prosper Junior Bakiny has positions in Nvidia. The Motley Fool has positions in and recommends Adobe, Nvidia, and Veeva Systems. The Motley Fool recommends the following options: long January 2028 $330 calls on Adobe and short January 2028 $340 calls on Adobe. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.