Artificial intelligence is rewriting the rules of medicine, promising to accelerate drug development, optimize clinical trials, and bring lifesaving therapies to market faster.

Veeva Systems is making that transformation happen. The Pleasanton, Calif.-based company develops software for biotechnology and pharmaceutical customers to manage everything from research and development and regulatory submissions to day-to-day commercial operations. Its software was originally built atop Salesforce but has since expanded to stand-alone applications.

"There is a huge opportunity for industry-specific AI to help life sciences get the right medicines to more patients," Paul Shawah, executive vice president of strategy at Veeva, says in a statement to Barron's.

As AI plays a bigger role in this workflow, Veeva stock looks like a solid bet into 2027. We see shares with a clear path to reclaim and surpass their record high of $344 set in 2021. Veeva shares, currently trading around $285, offer more than 30% upside over the next 12 months.

There are several reasons to like the stock. Veeva controls more than 80% of market share in biopharma customer-relationship management, or CRM, software. The company has been profitable for more than a decade, expanding sales tenfold since 2015.

Mawer Investment Management, a Canadian fund manager, began buying shares earlier this year. Analyst Renaud Paquin says the bullish case is centered around Veeva's dominant competitive positioning. Healthcare's compliance technicalities, in particular, make it difficult for competitors to create alternatives. Veeva's out-of-the-box features-such as tracking prescription drug samples and reporting adverse drug side effects under strict regulatory guidelines-are particularly hard to replicate.

With pharmaceutical companies, the contract research organizations tasked with running clinical trials, and healthcare providers all interacting through the same platform, the business keeps customers on board. "All the proprietary data ultimately makes Veeva an AI winner," Paquin says.

That advantage on the front line of evolving workflows is exactly what Veeva aims to monetize next. A major strategic shift for Veeva since 2024 has been its push to migrate its core customer base off Salesforce onto its native Veeva Vault CRM. The multiyear process aimed at breaking free from that dependency is well under way. It allows Veeva to both capture higher margins and gain full control of the underlying architecture and user experience, independent of Salesforce's infrastructure.

The migration has proceeded smoother than envisioned, with 14 of the 20 largest global biopharmas already committed to Vault CRM. In the process, Veeva has become the entry point for AI in the industry, with virtual-assistant-type features that boost productivity.

The vision with Agentic AI is to go a step further, handling increasingly complex, multistep workflows with far less human involvement. The company's new Falcon platform targets processes that are otherwise time-consuming and employee-intensive.

The goal, Shawah says, is straightforward: "increasing speed and lowering costs." One early example is medical, legal, and regulatory, or MLR review of promotional materials. Falcon MLR is available now, with additional agents for clinical, regulatory, and safety work planned for later this year and into 2027. Veeva estimates its tools could eliminate up to 70% of certain manual administrative tasks and potentially accelerate drug timelines by 30% to 90%.

Global spending on task-specific agents is projected to more than double each year through 2029, at a 119% compound annual rate, to more than $750 billion, according to Gartner. In many ways, biopharma is a natural fit for the technology, allowing companies to remove operational headaches and focus on what really matters-therapeutic breakthroughs.

For Veeva, rolling out Agentic AI opens up new markets, enticing customers with improved efficiency integrated into the processes they already use. More important, the opportunity in Agentic AI is incremental to an already strong growth story.

In its fiscal second quarter, Veeva delivered revenue of $928 million, up 18% year over year, and adjusted earnings per share of $2.35, also up 18%. Strength in the core Vault CRM offering helped the company raise full-year revenue guidance toward $3.7 billion and adjusted EPS to about $9.21, the third upward revision this year, representing a 14% increase from last year.

Management continues to target a $6 billion annual revenue run rate by 2030, implying average annual growth of 17.5% over the next three years. At the Sept. 9 Wells Fargo Healthcare Conference, Veeva management said this long-term goal originally announced in 2023 was built on expected market share gains in core products. The addition of Veeva Falcon can help it exceed those projections.

Wells Fargo analyst Stan Berenshteyn is on board. Acknowledging that full monetization of agentic labor will unfold through next year, the adoption potential is high and could gain traction quickly. Berenshteyn rated shares as Overweight, or Buy equivalent, with a price target of $330, citing new CRM wins migrating to Vault and accelerating traction within data cloud as coming catalysts to watch.

The stock currently trades around 27 times forward earnings-more expensive than the broader market and even Salesforce at 14 times, yet discounted to the company's historical average earnings multiple of 35 times earnings over the past five years. Veeva stock justifies a premium given the company's regulatory moat and high-quality fundamentals, including a balance sheet with zero debt.

Notably, adding up Veeva's operating margin-which consistently runs above 45%-alongside top-line growth around 15%, the company scores well above the "Rule of 40," a long-held value-creation benchmark in software. At a time when AI disrupters are struggling to generate consistent free cash flow, Veeva stands out with an AI potential that still appears underappreciated.

It's a compelling outlook, but risks remain. The continuing transition off Salesforce onto Vault CRM introduces short-term execution variables that could impact near term growth. Additionally, sentiment toward biotech, and AI in general, can shift quickly, adding volatility to Veeva's share price.

For now, Veeva offers investors a rare blend of defensive market dominance and aggressive growth upside. At the intersection of healthcare and technology, Veeva is a winner.

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