Software Giants Launch Massive Buybacks Amid AI‑Driven Valuation Pressures

The second quarter of 2026 has seen the technology sector outpace all S&P 500 groups, yet software firms remain among the worst performers year‑to‑date. Concerns that artificial intelligence could erode traditional software margins have kept valuations depressed, creating a buying opportunity for companies with strong balance sheets.

Salesforce (CRM) announced on March 16 its largest ever buyback, authorizing $25 billion to purchase roughly 103 million shares—about 14% of the company’s outstanding equity. The program represents half of a broader $50 billion repurchase authority approved in February and will be executed quickly under the accelerated component. After a 38% slide from its January high, Salesforce has recovered modestly, gaining just over 9% since early April. Analysts covering the stock have a moderate‑buy consensus, with an average twelve‑month price target implying roughly 35% upside, suggesting that the repurchase could help lift earnings per share (EPS) and support the stock as sentiment improves.

Adobe (ADBE) followed suit on April 21, unveiling a $25 billion buyback that would retire close to one quarter of its shares. The company framed the program as a “direct expression of confidence” in its cash flow and long‑term value proposition. Adobe’s growth trajectory has slowed; its four‑year average revenue growth fell from 21% (2018‑2021) to just under 11% over the past four years, and free cash turned negative in 2025. Nevertheless, the firm has delivered earnings beats for 13 of the last 15 quarters, underscoring resilient profitability. The stock is down about 28% YTD and roughly 40% over the past year, but it remains near its 52‑week low, offering a sizeable discount to analysts’ consensus price target of $345—about a 33% upside.

ADP (Automatic Data Processing) launched a more modest $6 billion repurchase plan, targeting 403 million shares or roughly 6% of outstanding equity. The payroll and workforce‑management software provider saw its share price fall nearly 27% after the announcement before rebounding over 16% since its April low. Revenue growth has decelerated from a near‑10% peak in 2022 to just above 7% in 2025, but ADP’s earnings record remains impressive, with 24 consecutive quarterly beats dating back to Q4 FY2020. Wall Street maintains a hold consensus on the stock, with an average twelve‑month target implying roughly 13% upside.

From an investor perspective, these buybacks serve two strategic purposes. First, they return capital to shareholders at a time when dividend yields are modest (Adobe does not pay a dividend, Salesforce’s yield is under 1%). Second, repurchases reduce the share count, potentially boosting EPS and price‑to‑earnings multiples if earnings remain stable or improve. In a market where software valuations have been punished by AI hype, reducing dilution can help narrow the gap between current prices and intrinsic value estimates.

However, investors should weigh the risks. Large buybacks consume cash that could otherwise fund acquisitions, R&D, or strategic pivots into AI‑centric products—areas where competitors are investing heavily. Additionally, if the broader tech correction deepens, even a reduced share count may not prevent further price declines. The effectiveness of these programs will hinge on execution speed, market liquidity, and whether earnings growth can rebound to historic levels.

Overall, the trio’s aggressive repurchase authorizations suggest management believes their stocks are undervalued relative to cash generation potential. For value‑oriented investors seeking exposure to software with a margin of safety, the buybacks add an extra layer of upside while mitigating downside through tangible capital return. Monitoring execution progress and any accompanying guidance updates will be critical in assessing whether these programs translate into meaningful price appreciation.