HSBC Identifies Two AI Companies Poised for Strong Earnings Growth. Is Now the Right Time to Invest?

HSBC Highlights Oracle and Salesforce as Top AI-Driven Picks for Earnings Season

HSBC has spotlighted Oracle (ORCL) and Salesforce (CRM) among a select group of 11 U.S. stocks expected to excel in the upcoming earnings period. According to the investment bank, these companies benefit from robust competitive strengths and are well-positioned to capitalize on the ongoing surge in artificial intelligence, which could fuel long-term expansion.

Analyst Nicole Inui curated this list by evaluating firms from diverse sectors—including consumer, healthcare, and technology—emphasizing their 2026 outlook, margin dynamics, and investments related to AI.

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Oracle and Salesforce: Expanding Their AI Leadership

Both Oracle and Salesforce are strengthening their positions in the enterprise software market by deepening their AI capabilities. Oracle, with its substantial backlog, provides investors with strong visibility into future revenues. Its cloud infrastructure and autonomous database solutions are becoming increasingly vital as organizations accelerate their adoption of AI at scale.

Salesforce, on the other hand, has introduced Agentforce—a new agentic layer within its platform—moving beyond conventional CRM offerings. This innovation enables AI agents to autonomously manage a range of business functions, from sales to customer service, positioning Salesforce to meet the rising demand for intelligent automation in the enterprise sector.

Despite economic uncertainties, both companies are benefiting from the rapid increase in AI infrastructure investments. Oracle’s cloud database services and Salesforce’s AI-powered customer engagement tools are addressing essential business needs as companies seek technological advantages.

Investors are now weighing whether these firms can convert their technological edge into financial performance that supports their current share prices.

Oracle: Is It a Smart Investment Right Now?

Oracle concluded its fiscal Q2 2026 with $523 billion in remaining performance obligations—a 433% increase year-over-year. During the quarter ending in November, Oracle secured $68 billion in new contracts, with major clients such as Meta (META) and Nvidia (NVDA) joining its roster.

The company’s total cloud revenue reached $8 billion, marking a 33% annual increase and surpassing the previous year’s 24% growth. Cloud infrastructure sales soared by 66% to $4.1 billion, while revenue linked to GPUs jumped 177%, underscoring Oracle’s momentum in the AI infrastructure space.

Operational Expansion and Technology Initiatives

Oracle now operates 147 active customer-facing regions, with plans to add 64 more. In the latest quarter, it delivered nearly 400 megawatts of data center capacity to clients.

The company’s Supercluster project in Abilene, Texas, is progressing as planned, deploying over 96,000 Nvidia Grace Blackwell GB200 units. Oracle has also started providing AMD (AMD) MI355 capacity, reflecting its strategy to work with multiple vendors to satisfy growing AI infrastructure needs.

Key customers like Uber (UBER) have scaled to more than 3 million cores on Oracle Cloud Infrastructure, while Temu utilized nearly 1 million cores during peak shopping events like Black Friday and Cyber Monday.

Oracle’s applications division continues to gain traction, with cloud applications revenue up 11% to an annualized run rate of $16 billion. Fusion ERP grew by 17%, and industry-specific cloud solutions—spanning hospitality, construction, retail, and more—rose 21%.

Management is optimistic that application growth will accelerate as a major sales reorganization is completed, aiming to boost cross-selling between Fusion and industry-focused products.

Looking forward, Oracle anticipates total cloud revenue to rise by 37% to 41% in the third quarter, and overall revenue to increase by 16% to 18%. The company has raised its fiscal 2027 revenue forecast by $4 billion, citing its substantial contract backlog, while maintaining its fiscal 2026 guidance at $67 billion.

Capital expenditures are now projected to be $15 billion higher than previously estimated, as Oracle ramps up investments to convert its backlog into revenue. The company is leveraging flexible financing options, including customer-supplied chips and vendor leasing, to limit borrowing.

Is Oracle Stock Undervalued?

Analysts expect Oracle’s adjusted earnings to climb from $6 per share in fiscal 2025 to $20.47 per share by fiscal 2030. If Oracle maintains a forward earnings multiple of 25—consistent with its current valuation—the stock could potentially more than double over the next three years.

Among 41 analysts covering Oracle, 29 rate it as a “Strong Buy,” one as a “Moderate Buy,” 10 as “Hold,” and one as a “Strong Sell.” The average price target stands at $305.81, well above the current price of $202.

The Investment Case for Salesforce (CRM)

Salesforce delivered strong results in Q3, with its Agentforce platform gaining significant momentum. The company reported $10.26 billion in revenue for the quarter, up 9% year-over-year, while remaining performance obligations increased 11% to $29.4 billion.

Agentforce, Salesforce’s AI agent platform, achieved $540 million in annual recurring revenue—a 330% year-over-year increase—making it the fastest-growing product in the company’s history. Salesforce closed over 18,500 Agentforce deals, with 9,500 paid transactions, representing a 50% quarter-over-quarter jump.

Customers are adopting Agentforce at scale: the platform processes 3.2 trillion tokens through Salesforce’s large language model gateway and powers 1.2 billion AI interactions across deployments.

Adoption is accelerating, with more than half of new Agentforce bookings coming from existing customers expanding their usage and replenishing consumption credits.

The number of companies using Agentforce in production rose 70% quarter-over-quarter, with major brands like Williams-Sonoma (WSM), Uber, and General Motors (GM) leveraging the technology for customer service and employee productivity.

Salesforce introduced agentic enterprise license agreements (AELAs), offering unlimited pricing for organizations committed to large-scale AI transformation. Combined annual recurring revenue from Agentforce and Data 360 reached nearly $1.4 billion, up 114% year-over-year.

The company’s data foundation business—encompassing Data 360, MuleSoft, and the recently acquired Informatica—is nearing $10 billion in scale. This infrastructure is essential for enterprises aiming to deploy AI agents effectively, as it provides unified, federated data and deterministic workflows within Salesforce applications.

To meet rising demand, Salesforce expanded its sales team by 23%. Operating cash flow increased 17% year-over-year to $2.3 billion, with the company on track to generate $15 billion in 2025.

Is Salesforce Stock Undervalued?

Analysts project Salesforce’s free cash flow to rise from $12.43 billion in fiscal 2025 (ending January) to $20.5 billion by fiscal 2030. If CRM maintains its current forward free cash flow multiple of 16.3, the stock could appreciate by nearly 50% over the next three years.

Of the 51 analysts tracking Salesforce, 36 rate it as a “Strong Buy,” two as a “Moderate Buy,” 12 as “Hold,” and one as a “Strong Sell.” The average price target is $330.67, compared to the current price of $241.