Salesforce (NYSE: CRM) went public at a split-adjusted price of $2.75 per share in 2004. A $10,000 investment in its initial public offering would be worth about $930,000 today. The cloud software giant dazzled investors with its rapid growth and the inorganic expansion of its ecosystem across the sales, marketing, e-commerce, and analytics markets.

But over the past three years, the stock has risen only about 6% as the Nasdaq has advanced 23%. The cloud leader lost its luster as its revenue growth cooled off. Salesforce still has a market cap of about $250 billion and will likely remain one of the world's largest cloud companies, but three of its industry peers might eclipse its valuation over the next three years.

Why did Salesforce's growth slow down?

Before we focus on the new challengers, we should review Salesforce's problems. It's the largest provider of cloud-based customer relationship management (CRM) services, and it leveraged that dominance to launch more marketing, e-commerce, analytics, data-visualization, and enterprise-collaboration services. A lot of that growth was driven by big acquisitions.

Salesforce's revenue had a compound annual growth rate (CAGR) of 34% from fiscal 2004 to fiscal 2024 (which ended this January). But its revenue rose only 11% in fiscal 2024, and analysts expect a CAGR of only 9% through fiscal 2027.

Its growth slowed down for three reasons: Macro headwinds drove many companies to rein in their cloud spending, it faced stiff competition from other tech giants like Microsoft and Adobe (NASDAQ: ADBE); and activist investors forced it to suspend its big acquisitions and focus on trimming costs, buying back more shares, and initiating a dividend.

Which three cloud companies could eclipse Salesforce?

ServiceNow (NYSE: NOW), Adobe, and Alibaba Group (NYSE: BABA) are all less valuable than Salesforce. But analysts expect all three to grow at a comparable or faster rate than Salesforce over the next three years.

Data source: Marketscreener; CAGR = compound annual growth rate.

ServiceNow provides cloud-based digital workflow services for organizing, optimizing, and automating unstructured tasks. Its new Now Assist AI platform further accelerates that process with generative artificial intelligence (AI). It operates an evergreen business model because economic downturns usually drive more companies to cut costs and streamline their workflows.

Adobe locks its customers into its industry-leading digital media tools (including Photoshop, Illustrator, and Premiere Pro) with sticky subscriptions. Those high switching costs keep its competitors at bay while insulating it from macro headwinds. It has also been expanding its generative AI ecosystem with content creation tools like Firefly.

Alibaba is China's largest e-commerce and cloud infrastructure company, but its growth has been throttled by macro, competitive, and regulatory headwinds in recent years. Its e-commerce business, which was slammed by tighter antitrust restrictions over the past three years, faces tough competition from PDD. Its cloud business is also being squeezed by Huawei and Tencent. But despite those challenges, Alibaba could recover as its headwinds ease.

How much could these companies be worth in three years?

Assuming all four companies match analysts' estimates and their price-to-sales (P/S) ratios hold steady, only Adobe will be worth more than Salesforce in three years:

Data source: Marketscreener. *Assuming the price-to-sales ratio remains the same.

But if Salesforce loses its luster and trades at just five times sales by fiscal 2027, its market cap would drop to $227 billion. At that level, ServiceNow -- which is expected to grow more than twice as rapidly -- might eclipse Salesforce's market cap.

As for Alibaba, we should remember that its valuations are being compressed by the trade, tech, and military tensions between the U.S. and China. If those tensions finally ease, we could easily see Alibaba's P/S double or triple. If it's trading at just two times sales by fiscal 2027, its market cap could jump to $325 billion.

Should you buy these three cloud stocks instead?

We should take all of those estimates with a grain of salt, but I believe ServiceNow, Adobe, and Alibaba could generate bigger gains than Salesforce over the next three years.

Salesforce was once a great growth stock, but its business is maturing, and the company could be revalued accordingly as it reins in its spending and runs out of fresh ways to expand its cloud ecosystem.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Microsoft, Salesforce, ServiceNow, and Tencent. The Motley Fool recommends Alibaba Group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Prediction: 3 Stocks That Will Be Worth More Than Salesforce 3 Years From Now was originally published by The Motley Fool