The importance of the enterprise software sector may be waning

Cramer highlighted the market’s reaction to Salesforce’s revenue decline Wednesday night – the first since 2006 – which sent shares down 20% by Thursday’s close. CEO Marc Benioff described a “balanced” purchasing environment across the industry in the wake of Covid-19, with companies buying large volumes of enterprise software.

While Cramer said he wasn’t writing off Salesforce, he suggested there may be too many enterprise software companies in the industry, saying perhaps customers have bought more of the company’s products than they can actually use. According to Cramer, companies may want to re-evaluate their enterprise software investments as they learn how AI can transform business operations.

He noted that some enterprise software is designed for tasks that artificial intelligence can make redundant. Cramer added that many of these products operate on a pay-per-user model, and sales could decline if companies lay off workers whose roles can be performed by artificial intelligence.

“For those selling legacy and traditional pre-AI software, AI is becoming more and more like a coin toss,” he said. “It could be a bonanza if they manage to fit into the new paradigm, but if they can’t, it could be the beginning of obsolescence.”

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Disclaimer CNBC Investing Club Charitable Trust owns shares of Salesforce and Nvidia.