Track market-moving stories before they get noisy

Salesforce bulls are pointing to an AI monetization curve that is bending sharply upward, but the bears have real ammunition too, and with Dreamforce and Investor Day arriving next week, the stock sits at a crossroads where the next few…

At $249.12, Salesforce (NYSE:CRM | CRM Price Prediction) screens attractively. The stock looks fully priced on trailing numbers, yet the AI monetization curve underneath it is bending sharply upward, and the setup into Dreamforce and the September 16, 2026 Investor Day gives bulls a near-term catalyst the market has not fully absorbed.

Salesforce is the world’s largest customer relationship management software company, and it has spent the past year retooling itself around agentic AI. Fiscal 2026 revenue reached $41.53 billion, and management is guiding fiscal 2027 to $46.10 billion to $46.40 billion, with a stated $63 billion FY30 target. The stock, however, has lagged. Shares are down 5.47% year to date even after a 29.25% one-month surge tied to the Q2 report.

Why the Agentforce Ramp Changes the Math The bull argument starts with AI traction that is no longer theoretical. Agentforce ARR crossed $1.5 billion, up over 240% year over year, and combined Agentforce plus Data 360 ARR reached roughly $3.9 billion, up more than 210%. Q2 delivered revenue of $11.35 billion, up 10.83%, and a sixth straight EPS beat.

Valuation looks reasonable against that growth. Shares trade at roughly 27x trailing earnings with a 7.02% free cash flow yield. The $25 billion accelerated buyback took diluted shares to 821 million from 962 million, and cRPO grew 14% to $33.5 billion, a leading indicator that the second-half reacceleration is real.

Where the Bear Thesis Has Real Teeth Skeptics can point to genuine cracks. Q2 non-GAAP EPS of $5.90 was flattered by $2.53 per share in strategic investment gains, and operating income fell 0.04% year over year despite double-digit revenue growth. Free cash flow guidance of only 4% to 5% growth undercuts the AI hyper-growth story.

The balance sheet has changed too. Noncurrent debt jumped to $39.3 billion from $10.4 billion to fund the ASR, total liabilities rose 96.56%, and shareholders’ equity fell 37.42%. Bears argue the buyback is manufacturing EPS while operating leverage stalls.

Why Some Investors Are Still Waiting The Hold case rests on ambiguity. Revenue growth is guided at just 11% to 12%, which is not obviously worth a premium multiple. Informatica integration, FX, and $94 million in Q2 restructuring charges add noise. Some investors may look to Q3 for confirmation that Agentforce is converting bookings into GAAP operating leverage.

What the Numbers Say Right Now Shares currently trade at $249.12 against an analyst consensus target of $272.13, implying roughly 9% upside. Sentiment is constructive: 6 Strong Buy, 34 Buy, 14 Hold, 0 Sell, and 2 Strong Sell across 56 analysts, with 36 upward EPS revisions for FY27 in the trailing 30 days and zero cuts.

Performance tells a mixed story. CRM is down 5.47% year to date and roughly flat over one year at -0.4%, while the S&P 500 has returned 12.32% YTD and 18.05% over one year. Targets are one input among many, and the gap between fundamentals and price action is unusually wide here.

Why $249 Screens Attractively At $249.12, the setup for Salesforce looks constructive. Here is why.

The path to appreciation is specific. Agentforce ARR has moved from $500 million to $800 million to $1.2 billion to $1.5 billion in four quarters, and management said ARR is about to cross $4 billion across AI and data. If the second-half reacceleration lands, FY28 EPS estimates near $16.00 understate the operating leverage that Contentful, Fin, and ClaudeForce can unlock.

The catalyst window is short. Dreamforce and Investor Day arrive next week, the ASR settles in October 2026, and Q3 guidance of $11.42 billion to $11.50 billion looks beatable given 14% cRPO growth.

What invalidates the thesis: a Q3 miss on subscription revenue, Agentforce ARR growth slowing below 100% year over year, or GAAP operating margin compressing further. Watch cRPO and net-new AOV quarter by quarter. Underperformance versus the S&P 500 has compressed the risk into an entry price where the AI ramp is nearly free.

Contact [email protected] for any questions or corrections.

The first half of 2026 was a tough time for software stock investors. The sector experienced a massive sell-off, with top names, including Salesforce (CRM +2.92%), dropping sharply as fears of AI displacing enterprise software led many investors to reevaluate the segment's top stocks.

Salesforce CEO Marc Benioff told investors this isn't the first so-called "SaaSpocalypse" he's seen in his tenure as head of the leading enterprise software company. He called it "a great buying opportunity" during the company's fourth-quarter earnings call in February and thanked the board for authorizing a $50 billion share repurchase program, including a $25 billion accelerated repurchase. He executed within weeks, issuing debt and buying back the stock in a massive bet on the company.

And now it's paying off. Salesforce's share price is up 38% since the end of March, getting another leg up with the company's second-quarter earnings report in late August. Investors wondering if they missed the opportunity to buy the SaaS stock could be in luck. It still looks like an incredible opportunity, given several key announcements in the company's earnings report.

Image source: Getty Images.

Did Salesforce just put the AI fears to bed? Salesforce reported solid earnings for the second quarter, but investors will need to dig a little deeper to understand what drove the market to push the stock price up more than 20% after the news.

First, the company reported revenue at the top end of its guidance and saw remaining performance obligations grow at 11%. Current remaining performance obligations climbed 14%, giving credence to management's standing projection that it'll experience revenue acceleration in the back half of 2026. That's further supported by management's guidance, which included a raise in its full-year revenue outlook.

More encouraging is that the revenue growth is being driven by artificial intelligence (AI). "We're seeing incredible demand for our AI and data products, with [annual recurring revenue] about to cross $4 billion," Benioff said in the press release. That's a 210% increase in AI-related revenue year over year.

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Building on that, it announced a partnership with Anthropic and introduced Claudeforce. The first set of products in Claudeforce will enable users to take actions right from a Claude chatbot window. It allows a Claude agent to access data within Salesforce and enables users to create apps and uncover answers buried in company data without any user interface constraints. It's also integrating Claude deeper into Agentforce and Slack.

The partnership reinforces Benioff's assertion that Salesforce's integration with businesses and its ability to collect and store enterprise data are essential, and the company's software will serve as an important layer that large language models can work on top of.

Salesforce is spending heavily on developing and marketing its AI efforts, though. That resulted in operating margin compression and a slight downward revision in full-year operating margin. Generally accepted accounting principles (GAAP) operating margin is now expected to come in at 20.1% for the full year, but non-GAAP operating margin remains unchanged at 34.3% for the year.

Despite the big jump in the stock price, Salesforce stock still looks cheap relative to its growth potential. Management may provide another update to its long-term growth targets later this month, but last year, it suggested it could grow revenue at a double-digit rate through the end of the decade while expanding the adjusted operating margin to about 40%.

The most recent earnings results should put some doubts about its potential growth to rest, but the market still fears that management is overly optimistic. That's why shares trade for just 16 times earnings expectations.

But even if management proves somewhat overly optimistic, the stock can still climb higher from here. As AI-related revenue becomes a bigger part of the business, it strikes more deals like Claudeforce, and revenue continues to compound at a double-digit rate, it should see some operating leverage as it scales its AI efforts. That should support strong organic earnings growth.

Meanwhile, the company is generating billions in free cash flow every year. That cash is used for additional acquisitions to bolster growth, with the rest going toward share repurchases. There's still about $23 billion of its $50 billion repurchase authorization remaining. That should push earnings-per-share growth even higher.

With a solid business that's proving to be a beneficiary of AI more than a victim of it, investors may still be undervaluing Salesforce right now.

Last week, Salesforce (CRM -1.37%) reported strong second-quarter results, but the bigger story was a deal that makes Anthropic's Claude the default reasoning engine inside Salesforce's products. Claude runs in Agentforce, Slack, and Slack's coding product, so Salesforce customers get a frontier model without ever leaving its ecosystem. The stock had its best day since 2020, jumping nearly 23% on the news.

In short, it seems the bearish thesis that large language models would erode Salesforce's competitive moat is beginning to fade. CEO Marc Benioff addressed it, stating, "This is not the SaaSpocalypse."

Image source: The Motley Fool.

The upgrade path The deal with Anthropic does two things for Salesforce. First, it removes a near-term risk by bringing a potential rival into the fold. "We're huge Salesforce customers," Anthropic CEO Dario Amodei confirmed. "We're not interested in destroying anyone."

Second, it strengthens the company's primary path to monetizing AI. Salesforce's premium editions cost 60% to 80% more per seat, and the new AI features are only available with premium subscriptions.

Given that just 5% of its sales and service users are currently on premium tiers, this deal provides Salesforce with a powerful new opportunity to upsell its customers and fuel further revenue growth. Importantly, it doesn't lock Salesforce's clients into using only Claude.

Its second-quarter results were solid, with revenue up 11% and earnings per share up 16% after excluding gains related to the company's stake in Anthropic. Annualized revenue for Agentforce, its AI product line, climbed 240% to $1.5 billion. And current remaining performance obligations (the value of signed contracts due within a year) grew 14%, up modestly from last quarter's 13%.

Aiding clients with AI I think this partnership is a smart move by Benioff. It puts the top large language model inside Salesforce's product, out of the box, and users can swap models if they prefer.

The best way for Salesforce to encourage AI adoption is to help its clients use AI to improve efficiency while protecting their data. The company is moving in that direction, but it still faces an uphill battle with seat-based pricing. Benioff admits Salesforce is "still trapped in some ways in old per-user pricing models."

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After the stock's recent run, shares trade at a reasonable 17.5 times forward earnings. The overhang of disruption-related fears is lifting, which should reinforce investor confidence in Salesforce's long-term value. Moving forward, the company can focus on driving growth.

Seismic CEO Rob Tarkoff inside Highspot’s longtime offices in Seattle. (GeekWire Photo / Todd Bishop) Highspot’s branding is still everywhere inside its longtime headquarters at World Trade Center East, overlooking the Seattle waterfront. But outside the corner office that once belonged to the sales software company’s co-founder and CEO, “Seismic” is scribbled on the whiteboard.

That’s how fresh the merger is. Two weeks after San Diego-based Seismic took over its Seattle-based rival, Seismic CEO Rob Tarkoff is in town this week for the first board meeting since the combination was completed, and the inaugural gathering of the combined company’s senior leadership team.

Highspot and Seismic sell sales enablement software: systems that manage the pitch decks, case studies and training materials salespeople use, and track which ones help close deals.

Founded in 2011 by Robert Wahbe and two former Microsoft colleagues, Highspot raised $650 million and held the top spot on the GeekWire 200, our ranking of the region’s privately held tech companies, prior to the merger. Wahbe, its CEO until the deal closed, is now on Seismic’s board.

Highspot co-founder Robert Wahbe, who led the company until the merger closed and now serves on Seismic’s board. (Highspot Photo) Tarkoff, a lawyer by training who spent much of his career in corporate development and M&A, became Seismic’s CEO in October 2025, succeeding co-founder Doug Winter. He had previously spent seven years running Oracle’s customer experience business.

The Highspot deal was announced in February, four months into his tenure.

Tarkoff addressed a wide range of questions from GeekWire in an interview Monday afternoon in Wahbe’s former office, which now serves as an ad hoc meeting room.

Here are the main takeaways from the interview:

A $600 million company: Tarkoff disclosed the combined company’s annual recurring revenue for the first time, putting it at about $600 million, with about $200 million of that coming from Highspot.

That makes the combined business three times the size Highspot was on its own and 50% bigger than Seismic. Tarkoff said the larger size will be an adjustment for people across both companies as they come together. “We’re getting closer to being a billion dollar company,” he said.

The companies did not disclose the financial terms of the deal, and Tarkoff declined to say whether the transaction put Highspot above or below the $3.5 billion valuation it reached in 2022.

Tim Porter, managing director at Madrona, which led Highspot’s Series A in 2014, called it a “multi-billion-dollar merger” in a post after the deal closed. Porter, who serves as a board observer at Seismic following the combination, wrote that Madrona hopes to help build the combined company into “a truly iconic AI software company, through a potential IPO and beyond.”

Permira, the private equity firm that has backed Seismic since 2020, remains the controlling shareholder of the combined company.

Impact on jobs: Seismic said when the deal closed that Highspot had more than 700 employees and that the combined company would have about 1,700 total. Tarkoff said in a statement at the time that the companies were “carefully evaluating our organizations to identify areas of overlap,” and that “any decisions will be communicated directly and proactively to employees.”

Since then, word of initial job cuts has started to emerge on LinkedIn and other online forums, but the company has not provided specifics or disclosed any numbers.

Asked for an update on job reductions this week, Tarkoff said, “We did our best to try to find roles for everybody that we could, but there’s always some level of overlap where you don’t need two people doing a task that requires one.”

Tarkoff did not provide numbers or address the question of whether more job cuts are coming. He said the company feels “really good about where we are from a go-forward staff perspective,” while adding: “We will continue to push performance and push growth and acceleration.”

Seismic’s future in Seattle: Tarkoff said Seismic will keep Highspot’s Seattle offices at World Trade Center East, where the company has a long-term lease. He called Seattle “one of the top centers of excellence for tech talent,” citing the ability to recruit from Amazon, Microsoft and others.

There will be no designated Seattle site leader, he said, describing the office as one of the company’s major centers rather than a headquarters.

However, several senior leaders of the combined company are based in Seattle, including Kurt Berglund, who led engineering at Highspot and is now Seismic’s senior vice president of AI.

Others include chief human resources officer Kimberly Schultz, who joined Seismic in June after 11 years at Amazon, where she led the team responsible for integrating acquisitions and divestitures, and Lucas Welch, VP of brand and communications, who spent nearly eight years at Highspot.

Tarkoff said a number of the company’s top engineers are based in Seattle as well.

Seismic’s other major locations include San Diego, Boston, Toronto, Vancouver, B.C., London and Hyderabad, India, where Tarkoff said the company has more than doubled its presence. Gurpreet Singh Pall, who was Highspot India’s chief operating officer, now leads Seismic’s India operations.

Product plans: The current Highspot and Seismic platforms both will continue to be sold and supported for the time being, Tarkoff said. He declined to set a timetable for eventually consolidating them, saying customers will move to a new platform when one is ready.

Now that the companies are able to work directly together, he said they’ve come to see that the two products are closer than he understood before the deal closed. Seismic has focused on complex enterprise workflows and regulated industries, financial services in particular, while Highspot built for a broader market of upper mid-market and lower enterprise customers.

With two teams no longer building the same things, he said, engineering can move to new work — more AI agents, additional content governance features, and deeper industry-specific workflows such as archiving and records retention.

Rivals are making the opposite case. Ali Akhtar, CEO of Letter AI, wrote in a LinkedIn post last week that mergers in the category turn companies inward for quarters or years, predicting “stalled innovation, layoffs, and distractions from delivering customer value,” and a period of reduced support for customers on legacy platforms. Akhtar is offering to buy out their contracts.

Pricing: Tarkoff said seat-based subscriptions aren’t going away, because enterprises want predictable costs. He said he’s skeptical of the usage-based pricing some AI vendors have adopted, pointing to high-profile examples of companies blowing past their budgets.

“Token-maxing is not really a good model long term, because it’s just going to force enterprises to use less,” he said.

He said Seismic is working toward pricing tied to outcomes rather than usage.

The Salesforce question: A week after the Seismic-Highspot merger closed, Salesforce and Anthropic announced Claudeforce, making Claude the default model across Slack and parts of Salesforce’s Agentforce platform.

Salesforce is both a channel and a rival for Seismic. Seismic’s software sells through the Salesforce AppExchange, and its Aura AI runs inside Agentforce, Salesforce’s agent platform. At the same time, Salesforce’s Sales Cloud includes its own sales enablement tools. And Agentforce agents increasingly do work that enablement platforms have owned.

Asked whether the partnership makes Salesforce a tougher competitor, Tarkoff said no.

As sellers start working inside Claude rather than inside individual applications, he said, the assistant will call each company separately — Salesforce for customer records, Seismic for approved content and sales materials. That makes Seismic a peer of Salesforce inside Claude, rather than an add-on inside Salesforce’s own product.

“It actually puts us more on an even playing field with Salesforce,” he said.

But Salesforce is considerably further along. Claudeforce launched with a Salesforce plugin carrying 37 prebuilt sales skills, in pilot now and due in open beta this month.

Much of the early analysis of the Salesforce-Anthropic partnership saw it as evidence that enterprise AI is consolidating around a few deep platform alliances rather than opening up.

Seismic’s next fiscal year begins Feb. 1. Tarkoff said he expects to spend much of the intervening months on the road with customers and employees. Seismic plans to give the first detailed look at its new product roadmap at its Shift conference, Oct. 12-15 in Carlsbad, Calif.

After a gloomy first half to the year, shares of Salesforce Inc. NYSE: CRM have been enjoying quite the recovery of late. Since June, the stock has surged more than 70%, and last week's earnings poured fresh fuel on the fire.

Salesforce Today

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It’s been a powerful run, and one that has gone a long way towards quieting fears that the rise of AI might be tolling the bell for traditional software platforms.

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That fear had weighed on Salesforce for months, resting on the theory that businesses might ditch expensive software contracts in favor of home-grown AI-powered alternatives.

However, recent earnings results told a very different story, and investors have piled in as a result.

The one obvious catch is that the shares now look stretched.

The blistering pace of Salesforce’s rally has pushed a closely watched momentum gauge, the relative strength index (RSI), up above 80, a level that screams overbought.

For those of us on the sidelines, that leaves one simple question: were the results good enough to justify further gains even with the RSI this stretched, or does buying in now risk being the last one holding the bag when the stock takes a well-earned breather?

Why the Stock Jumped Last WeekThe latest spark to this multi-month rally was a set of results that gave investors plenty to cheer about. Salesforce’s revenue grew at a solid 11% year on year, while contracted future revenue accelerated, and customer churn fell to near-record lows.

Those signals matter because they counter one of the great fears hanging over the software industry: that AI might tempt companies to abandon expensive software platforms. Instead, Salesforce's customers are staying put and spending more, suggesting those fears may have been overdone.

On the back of that strength, management also raised its guidance for the year, which helps explain why shares jumped nearly 25% from their pre-earnings level.

Salesforce Inc. (CRM) Price Chart for Tuesday, September, 1, 2026

The AI Engine Behind the NumbersIf the results lit the fuse, the company's progress in AI provided the charge. Salesforce’s flagship suite of AI tools, known as Agentforce, has been growing at a blistering pace, with the recurring revenue it generates more than tripling over the past year.

That is the crucial point for the bulls, especially when the red-hot RSI makes the stock look so overbought. The earnings report was proof that Salesforce is using AI to its advantage, rather than being disrupted by it. Considering shares had spent the first half of the year losing more than 40% of their value amid fears of the latter scenario, that’s a lot of downside to reverse.

The cherry on top was the announcement of Salesforce’s partnership with AI giant Anthropic, which will see Salesforce integrate Anthropic’s Claude model directly into its platform. It is in many ways an ironic turn of events—the very kind of AI once seen as a threat to Salesforce's future has now been brought inside the tent as a partner, turning a potential disruptor into a key selling point.

What the Analysts Are SayingSalesforce Stock Forecast Today12-Month Stock Price Forecast:
$262.13
1.47% Upside

Moderate Buy
Based on 48 Analyst Ratings

Current Price$258.33High Forecast$400.00Average Forecast$262.13Low Forecast$160.00Salesforce Stock Forecast Details

Wall Street, unsurprisingly, has responded with a string of analyst updates, almost universally bullish, in the wake of the report.

To name just a handful: Argus, TD Cowen, Deutsche Bank and Needham all reiterated their Buy or equivalent ratings, with some refreshed price targets as high as $400.

From where Salesforce is trading, even after the post-earnings pop, that’s still an impressive 55% in targeted upside.

Their bullish outlook is reflected across the wider analyst community's stance, which nets out to a MarketBeat consensus rating of Moderate Buy for the stock.

An Overbought Stock Still Worth OwningFor all the bullish momentum, there is no escaping the fact that the stock looks frothy in the short term. The RSI’s current reading near 80 is its highest level in nearly two years, and prints like that tend to precede a pullback at some point, even if it’s just some healthy profit taking.

For investors, the thing to watch is Salesforce’s price action over the coming days. If shares start to trickle lower this week rather than push on to fresh highs, that would be an early hint the rally is pausing for breath, and sellers are beginning to take some money off the table.

Why a Dip Would Be a GiftYet even that scenario would be no bad thing. A cooling-off period would give those on the sidelines something they don’t have right now: a more comfortable entry point into a stock with an awful lot going for it. Between accelerating demand, tangible AI revenue, and a wave of rising price targets, the longer-term case is compelling.

So while the overbought reading counsels a little patience, the bigger picture is clear. For investors looking to capture the AI revolution, Salesforce increasingly looks like a stock to own rather than avoid, whether they buy in now or wait for an inevitable bout of profit-taking.

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Jim Cramer suggested on Friday that the recent "SaaSpocalypse" selloff in software stocks may have been driven in part by short bets from Situational Awareness and said the worst could be over for Salesforce (NYSE:CRM).

Cramer said he is "beginning to wonder" how much of the episode was tied to the hedge fund betting against SaaS names, adding, "At the very least, the worst is over for Club name Salesforce."

Salesforce CEO Rejects Saaspocalypse Fears Marc Benioff, CEO of Salesforce, dismissed concerns about a SaaSpocalypse as "nonsense" after the company reported a record second quarter. On Thursday, Benioff emphasized the strength of Salesforce’s performance, noting that bookings surged while attrition remained low. He urged an end to the negative narrative surrounding AI’s impact on enterprise software. Trending

Salesforce’s second-quarter revenue rose 11% year-over-year to $11.35 billion, and the company raised its full-year fiscal 2027 revenue guidance to a range of $46.1 billion to $46.4 billion. The partnership with Anthropic on Claudeforce AI was highlighted as a key driver of this success. Salesforce Stock Surges on Anthropic Partnership Salesforce shares surged as much as 20% on Thursday following its fiscal second-quarter beat and raised outlook. The company attributed much of the profit surge to its investment in Anthropic, booking a $2.6 billion gain from the stake. The rally was further fueled by the expanded partnership with Anthropic, which introduced the Claudeforce tool. This integration allows sales staff to access Salesforce data directly within Anthropic’s Claude chatbot, enhancing operational efficiency. Technical AnalysisCurrently trading at $260.69, Salesforce is significantly outperforming its moving averages, trading 44.05% above its 50-day SMA and 30.12% above its 200-day SMA. The stock’s RSI(14) stands at 81.67, indicating an overbought condition.

Image: Shutterstock

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The upcoming report from Salesforce (CRM - Free Report) is expected to reveal quarterly earnings of $3.27 per share, indicating an increase of 12.4% compared to the year-ago period. Analysts forecast revenues of $11.3 billion, representing an increase of 10.4% year over year.

The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.

Prior to a company's earnings release, it is of utmost importance to factor in any revisions made to the earnings projections. These revisions serve as a critical gauge for predicting potential investor behaviors with respect to the stock. Empirical studies consistently reveal a strong link between trends in earnings estimate revisions and the short-term price performance of a stock.

While investors typically use consensus earnings and revenue estimates as indicators of quarterly business performance, exploring analysts' projections for specific key metrics can offer valuable insights.

Bearing this in mind, let's now explore the average estimates of specific Salesforce metrics that are commonly monitored and projected by Wall Street analysts.

Analysts expect 'Revenues- Professional services and other' to come in at $525.15 million. The estimate indicates a change of -3.8% from the prior-year quarter.

The collective assessment of analysts points to an estimated 'Revenues- Subscription and support' of $10.78 billion. The estimate points to a change of +11.3% from the year-ago quarter.

Analysts forecast 'Revenues- Subscription and support- Agentforce Sales' to reach $7.17 billion. The estimate suggests a change of +216.1% year over year.

Analysts' assessment points toward 'Revenues- Subscription and support- Agentforce 360 Platform, Slack and Other' reaching $3.62 billion. The estimate indicates a year-over-year change of +73.9%.

Based on the collective assessment of analysts, 'Remaining performance obligation (RPO) - Current' should arrive at $33.31 billion. Compared to the current estimate, the company reported $29.40 billion in the same quarter of the previous year.

Analysts predict that the 'Remaining performance obligation (RPO) - Total' will reach $67.69 billion. The estimate compares to the year-ago value of $59.90 billion.

It is projected by analysts that the 'Remaining performance obligation (RPO) - Noncurrent' will reach $34.28 billion. Compared to the current estimate, the company reported $30.50 billion in the same quarter of the previous year.

View all Key Company Metrics for Salesforce here>>>

Over the past month, Salesforce shares have recorded returns of +30.9% versus the Zacks S&P 500 composite's +2.8% change. Based on its Zacks Rank #3 (Hold), CRM will likely exhibit a performance that aligns with the overall market in the upcoming period. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Salesforce (CRM -2.56%) made one of the biggest capital-allocation decisions in software this year, and it came in two parts.

In March, the company entered a $25 billion accelerated share repurchase -- the largest such deal in history, by its own description -- funded with a $25 billion debt issuance. Then, reporting fiscal first-quarter results in late May, it told investors that fiscal 2027 operating and free-cash-flow growth would come in around 4% to 5%, half the 9% to 10% it had guided to in February, specifically to reflect the cost of that debt.

Borrowing $25 billion to buy your own stock is an aggressive move for any company. For Salesforce, which spent years funding buybacks comfortably out of its own cash flow, it marks a change in posture.

With the stock at about $196 as of this writing, roughly 27% below its 52-week high of $269.11, was the trade worth it?

Image source: Getty Images.

One enormous repurchase The buyback is part of a $50 billion authorization Salesforce's board approved in February. The accelerated structure means most of the share-count reduction landed immediately: The company received an upfront delivery of 103 million shares, about 80% of the total it expects to repurchase, with final settlement expected in the fiscal third quarter.

Add it up, and Salesforce returned $27.5 billion to shareholders in a single quarter ($27.1 billion of repurchases plus $365 million in dividends). For perspective, that's more than the company generated in free cash flow over the entire prior fiscal year. Its diluted share count is now down 10% from a year ago.

The price looks defensible, too. The upfront shares were delivered against Salesforce's roughly $194 close in mid-March, near where the stock trades today, and the final tally will be set by the stock's average price over the life of the deal. Salesforce didn't buy the top. It bought after the market had already knocked the stock down by a quarter.

Slower cash flow, on purpose The cost side is just as concrete. Salesforce generated $6.7 billion of operating cash flow in the fiscal first quarter, up only 3% year over year, and $6.6 billion of free cash flow, up 4%. The updated fiscal 2027 guidance reflects the interest burden the new debt layers onto that base.

That's a real bill. A company whose revenue is growing 11% is now guiding cash flow to grow at less than half that pace, and the gap is self-inflicted. Investors who prize steadily compounding free cash flow may not love what they see in fiscal 2027.

So, what did shareholders get for it? Diluted earnings per share rose 52% year over year to $2.42 in the fiscal first quarter -- though much of that jump came from a swing in gains on strategic investments rather than from operations. The longer-lasting effect is the share count. Every future dollar of profit is now spread across a tenth fewer shares.

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The business behind the buyback Of course, the buyback only matters if the business behind it holds up. So far, it is holding up.

Fiscal first-quarter revenue rose 13% year over year to $11.1 billion, helped by a $444 million contribution from the acquired Informatica business. Current remaining performance obligation (contracted revenue the company expects to recognize over the next 12 months) rose 14% to $33.6 billion. And management raised the midpoint of its fiscal 2027 revenue guidance, which now sits at $45.9 billion to $46.2 billion, about 11% growth.

That's a solid, unspectacular growth profile. It's also what the buyback case rests on. At about 23 times earnings, Salesforce is priced like a maturing software company, not like an AI winner. Retiring 10% of the share count at that kind of multiple is arguably a better use of money than the big acquisitions Salesforce pursued in earlier eras.

Sure, the debt spends flexibility the company used to have, and a year of 4% to 5% cash-flow growth is a cost shareholders have to live with. But the growth hit is front-loaded, and the benefit compounds -- the share count stays retired.

The market has been harsh on the stock, mostly over doubts about how fast Salesforce can grow in an AI-disrupted software industry. The buyback doesn't settle those doubts. What it does is make each remaining share a bigger claim on whatever growth Salesforce delivers, purchased at prices the company considered low. I think the arithmetic holds up. If the 11% growth does too, the trade will have been worth it.

Salesforce's (CRM -2.10%) stock price has fallen 46% from its previous high amid what CEO Marc Benioff calls the "SaaSpocalypse" -- the fear that artificial intelligence (AI) agents will pressure corporate spending on software-as-a-service (SaaS) products.

Benioff doesn't see that playing out. His company spent a record $27 billion in stock buybacks in the first quarter ending in April, signaling confidence in its growth trajectory. That's a massive capital return, equal to nearly 19% of Salesforce's market cap as of April 30.

Combined with continued revenue growth, the repurchase sends a clear message: Management believes the market price may be discounting the company's long-term earnings power.

Image source: Salesforce.

What the stock buyback means for investors Benioff signaled he's willing to accelerate repurchases when he sees a meaningful gap between the stock price and the company's long-term value.

The most immediate impact is a lower share count, which lifts earnings per share. Diluted shares outstanding fell 11% in the quarter, boosting non-GAAP (generally accepted accounting principles) EPS by $0.23 and helping drive a 50% year-over-year increase in adjusted earnings. Without the buyback, adjusted earnings would have risen 41%.

The buybacks boosted earnings, but they also reinforce a broader point: Salesforce's AI strategy appears to be strengthening the business -- a direct counter to the "SaaSpocalypse" narrative weighing on the stock.

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The growth that underpins confidence in the future On the fiscal Q1 earnings call, Benioff acknowledged AI is reshaping software: "You've heard the narrative on the SaaSpocalypse ... that these AI apps are transforming software, which is definitely true." But he also indicated that Salesforce is benefiting from that shift, rather than being disrupted by it: "All of our products are just so much better because of it."

In fiscal Q1, Agentforce's annual recurring revenue reached $1.2 billion, up 205% year over year. Customers are also embedding these tools into daily workflows, as shown by a 152% quarter-over-quarter increase in tokens processed to 28.6 trillion, with an 111% increase in agentic work units delivered.

Some legacy areas showed weakness, including commercial cloud and Tableau. Still, total first-quarter revenue beat consensus, rising 13% year over year to $11 billion. Free cash flow was strong at $6.6 billion, providing the financial flexibility to fund buybacks at this scale.

What to watch AI agents are creating new competitive dynamics, adding uncertainty to the long-term software landscape. For Salesforce, the key is continued momentum in measurable adoption: agentic work units delivered, token volume processed, and Agentforce annual recurring revenue. Sustained strength in those metrics would signal that the company's value proposition and competitive position remain intact.

Even after the rebound, the stock remains well below its prior highs and trades at a modest forward price-to-earnings multiple of 14. Investors may see the pullback as an attractive entry point.

, /PRNewswire/ -- Veeva Systems (NYSE: VEEV) today announced that Eli Lilly and Company (Lilly) has committed to Veeva Vault CRM globally.

Vault CRM is part of the Vault CRM Suite of applications that provides the technology foundation for agentic commercial, the new commercial model that leverages AI to get the right medicines to more patients.

Veeva Vault CRM Selected by Eli Lilly and Company "We are excited to expand our strategic work with Veeva by moving to Vault CRM," said Giuseppe Firenze, senior vice president, U.S. HCP and field engagement hub at Lilly. "Vault CRM will help Lilly bring our breakthrough medicines to more patients."

"Lilly creates medicines that make life better for people around the world," said Veeva CEO Peter Gassner. "We are proud to expand our strategic work with Lilly as they roll out Vault CRM globally."

Learn more about Veeva Vault CRM Suite, including the Agentic Call Report to generate Commercial Evidence, at veeva.com/crm.

About Veeva Systems
Veeva delivers the industry cloud for life sciences with applications, agents, data, and consulting. Committed to innovation, product excellence, and customer success, Veeva serves more than 1,500 customers, ranging from the world's largest pharmaceutical companies to emerging biotechs. As a Public Benefit Corporation, Veeva is committed to balancing the interests of all stakeholders, including customers, employees, shareholders, and the industries it serves. For more information, visit veeva.com.

Veeva Forward-Looking Statements
This release contains forward-looking statements regarding Veeva's products and services and the expected results or benefits from use of our products and services. These statements are based on our current expectations. Actual results could differ materially from those provided in this release and we have no obligation to update such statements. There are numerous risks that have the potential to negatively impact our results, including the risks and uncertainties disclosed in our filing on Form 10-Q for the fiscal year ended April 30, 2026, which you can find here (a summary of risks which may impact our business can be found on pages 33 and 34), and in our subsequent SEC filings, which you can access at sec.gov.

SOURCE Veeva Systems

Investors who buy Salesforce (CRM -3.95%) today are really betting on whether CEO Marc Benioff's "agentic enterprise" vision sticks, not just whether the next quarter beats expectations.

His conviction isn't just bravado; it's tied to a specific bet that artificial intelligence (AI) will become digital labor within Salesforce rather than a commodity feature that would make its platform irrelevant.

That makes the stock a higher‑risk, higher‑reward hold or accumulation story, not a sleepy blue chip.

Image source: Getty Images.

When Benioff pushes back on fears that AI will kill Salesforce, he's arguing that the company has rebuilt itself around the idea of the agentic enterprise -- a world where AI agents do work and humans provide judgment. On Salesforce's own materials, you can see the evolution: Einstein introduced predictive AI, then generative capabilities layered on top, and now Agentforce is presented as agentic AI that plans and executes multistep tasks grounded in unified customer data.

In its fiscal 2026 press release, Salesforce describes itself as "the operating system for the Agentic Enterprise" and introduces Agentic Work Units, a way of counting tasks completed by AI agents, with 2.4 billion of those units already delivered. To me, that's a quiet but important signal: Salesforce is trying to measure and sell AI as labor, not just as another checkbox feature.

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Some aspects to watch out for Wall Street's anxiety still has teeth. The company itself, in that same release, lists "uncertainties regarding AI technologies and their integration into our product offerings" among key risks. Salesforce is pushing a transition from simple seat‑based pricing toward consumption metrics tied to AI work. That may be smart over a decade, but in the near term, it muddies visibility for investors who grew comfortable tracking users and subscription revenue.

There's also execution risk: Salesforce is simultaneously ramping Agentforce, expanding Data 360, and weaving AI through Slack and other acquired platforms. Even in its own language, the business acknowledges dependence on external model providers and a shifting regulatory backdrop. A strategy this ambitious leaves less margin for error.

At the same time, the internal signals around AI look more substantial than hype. Salesforce reports Agentforce annual recurring revenue (ARR) of $800 million, up 169% year over year, with 29,000 deals closed and Agentforce accounts in production up nearly 50% quarter over quarter. Those numbers are still small relative to total revenue, but they show customers paying directly for AI agents rather than passively accepting them.

Data 360 ingestion, hitting 112 trillion records in fiscal 2026, more than doubled the prior year, suggesting customers are consolidating more of their customer data and workflows on Salesforce's rails. The more intelligence moves to where work happens, the more valuable that data gravity becomes.

So should investors bet on Benioff's conviction? To me, Salesforce today is best used as a deliberate, sized wager on a specific AI thesis -- that large enterprises will demand trusted, governed AI labor deeply integrated with their customer data. If you buy that premise and can tolerate volatility while this agentic model matures, the current skepticism‑driven pullback looks like a reasonable entry point.

If you think AI will be commoditized and lighter tools will win, this is a stock to approach cautiously or avoid.

Key Takeaways Slack accounted for nearly half of Salesforce's $1M-plus ACV deals, with bookings up 80% year over year.More than 1 million users adopted Slack MCP in six weeks, while Agentic Work Units jumped nearly 350%.Slack's links with Agentforce and Data 360 could lift cross-selling, retention and Salesforce's revenue mix. Slack is becoming a much bigger contributor to Salesforce, Inc.'s (CRM - Free Report) artificial intelligence (AI) strategy. Once known primarily as a workplace messaging platform, Slack is now evolving into an AI-powered collaboration hub that connects employees, applications and AI agents. This transformation could help Salesforce generate higher-value software revenues and deepen customer relationships.

The momentum is already visible. During the first quarter of fiscal 2027, Slack accounted for nearly half of Salesforce's deals worth more than $1 million in annual contract value. Slack bookings in this category increased 80% year over year, reflecting strong enterprise demand for AI-enabled workplace solutions.

Salesforce is also embedding AI capabilities directly into Slack. Slackbot now functions as a Model Context Protocol (“MCP”) client, enabling users to interact with enterprise applications using natural language. The company reported that more than 1 million users adopted Slack MCP within its first six weeks, while Slack Agentic Work Units surged nearly 350% sequentially. These metrics highlight growing customer engagement with AI-powered workflows.

The tighter integration between Slack, Agentforce and Data 360 creates additional cross-selling opportunities. Customers using Slack can more easily adopt Salesforce's broader AI platform, helping increase spending across multiple products. This ecosystem approach also improves customer retention by making Salesforce's offerings more deeply integrated into daily business operations.

Salesforce's first-quarter fiscal 2027 revenues rose 13% year over year to $11.13 billion, supported by strong AI demand. As Slack continues evolving into an enterprise AI platform rather than just a communication tool, it could contribute a larger share of Salesforce's revenue mix and support sustainable long-term growth. The Zacks Consensus Estimate for full-fiscal 2027 revenues is currently pegged at $46.09 billion, indicating a year-over-year increase of approximately 11%.

How Do Salesforce's Collaboration Rivals Compare?Two key competitors challenging Salesforce's AI-powered collaboration strategy are Microsoft Corporation (MSFT - Free Report) and Zoom Communications, Inc. (ZM - Free Report) . Both are embedding generative AI into workplace collaboration platforms to increase customer engagement and drive higher software spending.

Microsoft has integrated Copilot across Microsoft Teams and Microsoft 365, giving users AI-powered meeting summaries, content creation and workflow automation. This strategy is helping expand the value of its productivity suite.

In the fourth quarter of fiscal 2026, Microsoft reported revenues of $90 billion, up 18% year over year, while Microsoft 365 Commercial cloud revenues increased 14%. The company also reported Azure revenue growth of 43%, providing a strong foundation for continued AI investments that compete directly with Salesforce's Slack ecosystem.

Zoom is also expanding beyond video conferencing by embedding Zoom AI Companion across meetings, chat and contact center offerings. In the first quarter of fiscal 2027, Zoom's enterprise revenues increased 7% year over year to about $758 million, while enterprise customers generating more than $100,000 in annual revenues grew 8% to nearly 4,534.

Zoom is using AI to encourage customers to adopt multiple products, similar to Salesforce's strategy of linking Slack with Agentforce and Data 360.

Salesforce’s Price Performance, Valuation and EstimatesShares of Salesforce have plunged 29.8% year to date, while the Zacks Internet – Software industry has fallen 11.3%.

Salesforce YTD Price Return Performance
Image Source: Zacks Investment Research

From a valuation standpoint, CRM trades at a forward price-to-earnings ratio of 12.55, significantly below the industry’s average of 26.22.

Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Salesforce’s fiscal 2027 and 2028 earnings implies a year-over-year increase of approximately 13.1% and 9.3%, respectively. Estimates for fiscal 2027 earnings have been revised upward in the past seven days, while estimates have been revised downward for fiscal 2028 over the past seven days.

Image Source: Zacks Investment Research

Salesforce currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

On Friday, the Department of Veterans Affairs awarded Salesforce (CRM +5.87%) a contract with a ceiling of $1.6 billion -- a three-year Agentic Enterprise License Agreement built around the company's artificial intelligence (AI) agent products. Shares rose more than 4% on Friday following the announcement.

The dollar figure is what grabbed attention. But the more interesting part of the award is what it says about demand for Agentforce, the AI agent product at the center of Salesforce's growth story. After all, federal agencies aren't known for speculative technology purchases. A multiyear agreement of this size suggests AI agents are moving out of pilot projects and into real procurement budgets.

Still, investors should understand what a $1.6 billion ceiling actually is. And what it isn't.

Image source: Getty Images.

What the VA actually bought The award covers Agentforce Public Sector and Agentforce Health, along with Slack, MuleSoft, Tableau, and the company's Data 360 platform, through Missionforce, its government cloud business. The VA operates 170 medical centers and over 1,100 outpatient clinics, serving more than 17 million veterans. Salesforce said the agency will use Agentforce for around-the-clock virtual contact center support, patient triage, benefits verification, and scheduling -- including a goal of cutting the time to schedule an appointment from an average of 28 days to minutes.

"Every minute a VA employee spends navigating disconnected systems is a minute not spent serving a Veteran," said Kendall Collins, CEO of Salesforce's Missionforce and government cloud business, in the company's press release about the award.

Now for the distinction that matters. The agreement is structured as one base year with two one-year renewal options. And $1.6 billion is the most the VA can spend across all three years, not what it has committed to spend. The award converts into revenue only as the agency actually orders services.

If the deployment goes well, the renewals likely follow. If it doesn't, the agency can walk away after the first year.

Even in the best case, the money arrives over three years. At the full ceiling, that averages out to a little over $500 million annually (about 1% of the roughly $46 billion in revenue Salesforce expects this fiscal year). To me, the signal is worth more than the dollars.

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Agentforce is becoming a real business That signal adds to a growing pile of evidence that Agentforce is scaling quickly.

In the fiscal first quarter of 2027 (the period ended April 30, 2026), Agentforce annual recurring revenue (ARR) reached $1.2 billion, up 205% year over year. Two quarters earlier, that figure had just crossed half a billion dollars. The business has more than doubled in six months -- and it's still climbing.

Combined with Data 360, Salesforce's AI and data products now carry nearly $3.4 billion in ARR, up more than 200% year over year, though about $1.1 billion of that arrived with the company's acquisition of Informatica. The broader business is moving in the right direction, too, with fiscal first-quarter revenue rising 13% year over year to $11.1 billion.

Sure, a few billion dollars of ARR is a sliver of the $45.9 billion to $46.2 billion in revenue Salesforce has guided for this fiscal year, which implies 11% growth. But it's the fastest-growing piece of the business, and management is counting on it. "We remain confident in delivering organic revenue acceleration in the second half of FY27," said Salesforce chief financial officer Robin Washington in the fiscal first-quarter earnings release.

A federal agency attaching a $1.6 billion ceiling to agentic software backs that confidence up. It isn't even the year's biggest example. In January, the U.S. Army awarded the company a $5.6 billion, 10-year ceiling agreement built around Missionforce, Salesforce's national security platform.

Meanwhile, the stock is priced as if little of this matters. Even after Friday's pop, shares closed at $163.66, down about 40% from their 52-week high. That's less than 12 times the midpoint of management's adjusted earnings-per-share guidance for this fiscal year -- a multiple more typical of a slow-growth value stock than of a company growing revenue at a double-digit clip with AI products compounding at triple-digit rates.

The VA deal won't move this year's numbers much. What it could move is the bear case: the idea that AI agents will eventually eat into businesses like Salesforce's instead of feeding them. It's hard to square that fear with one of the country's largest healthcare systems betting its call centers and scheduling on Agentforce.

I thought the stock looked attractive before Friday, and this award makes the case easier to believe. If the VA exercises its first renewal next year, the deal may start to look less like a headline and more like a template. At today's valuation, I don't think investors need that to happen to do well. But it wouldn't hurt.

Shares of software giant Salesforce (CRM 1.97%) were falling on Tuesday, down as much as 3.9% in early trading, before recovering slightly to a 2.7% decline as of 1:30 p.m. EDT.

The move was somewhat notable, given that the broader Nasdaq Composite was up by about 1.4% at the same time.

Salesforce was on the receiving end of a Wall Street analyst's downgrade today, along with a big price target cut. That led to a sell-off; however, given the stock's bargain-basement valuation, is the analyst's negativity already baked into the share price?

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Morgan Stanley sours on Salesforce's AI transition Salesforce is facing the same headwinds and uncertainties that all software stocks have experienced since the emergence of powerful AI coding agents from Anthropic and other AI labs at the beginning of this year.

Salesforce, of course, isn't standing still. The company has developed its own agentic AI features and capabilities, which it calls Agentforce. In June, Salesforce made a very interesting acquisition with an eye toward the agentic future: customer service agent software company Fin. Fin has already transformed its business model in the manner Salesforce needs to, including an outcome-based pricing model on its fully autonomous customer service agent, run on a custom AI model independent of the major AI labs.

Still, Adam Wood of Morgan Stanley doesn't think it's enough. The analyst lowered his rating on the shares from "Overweight" to "Equal Weight" and his price target from $287 to $185 today.

Wood is actually bullish on the leading indicators for Agentforce and Salesforce's new agentic AI offerings; however, Wood also acknowledges that this is coming at the expense of some of Salesforce's larger, legacy software subscription services. Moreover, Agentforce's revenue is still small, coming in at just a $3.4 billion annualized run rate last quarter; meanwhile, Salesforce projects about $46 billion in revenue this fiscal year. So Agentforce still accounts for only about 7% of revenue; even if that keeps growing fast, a drag on the larger non-agentic business could cap overall growth.

While he believes Salesforce is making the right moves and could emerge as an AI winner, Wood now thinks the inflection to overall company-level organic growth may take longer than expected. Given the uncertainty, he is bringing down the stock price to reflect a compressed valuation multiple that the market now attributes to much of the software sector.

Image source: Getty Images.

Long-term opportunity in the software sector? It should be noted that Salesforce currently trades at roughly $168 per share, which is still below Wood's new price target and represents a valuation of just 12 times this year's earnings estimates.

That valuation implies little to no growth going forward, which may be warranted given the uncertainties around agentic AI. However, Salesforce is returning lots of cash to shareholders through a large share repurchase program. If the company successfully navigates the agentic AI transition and eventually returns to growth, today's valuation could be a bargain. Still, investors should be prepared to wait a while to find out.

Shares of enterprise software giant Salesforce (CRM +1.65%) fell 40.9% in the first half of 2026, according to data from S&P Global Market Intelligence.

Salesforce, like many other software-as-a-service stocks, experienced a violent sell-off to start 2026, despite reporting relatively solid financial results. This was due to the first quarter's "SaaS-pocalypse," in which the rapid adoption of Anthropic's Claude Code tools and open-source agents such as OpenClaw ushered in the era of agentic AI.

Agentic AI's improving capabilities spurred investors to sell software stocks, as fears emerged that these new AI leaders could disrupt traditional enterprise software.

However, Salesforce countered the threat with a slew of acquisitions and a massive buyback program.

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How Salesforce is countering the agentic threat At first glance, it's a bit of a head-scratcher as to why Salesforce fell as much as it did. Salesforce beat revenue and earnings expectations on each of its earnings reports during the first half. Moreover, the company raised the lower end of fiscal 2027 guidance, remaining performance obligations continued to rise, and management even provided a long-term fiscal 2030 revenue guidance of $63 billion. That's about 37% above this year's revenue outlook of $46 billion, and would amount to roughly an 11% annualized growth rate over three years.

Investors appeared to doubt that long-term projection, however, as artificial intelligence labs released ever-more powerful models. In February, Anthropic released industry-specific plugins for its latest Claude model. These advanced tools indicated Anthropic was muscling into the territory of traditional software. The result was widespread selling across the software sector, from which Salesforce wasn't spared.

But there are several ways Salesforce is pivoting to the new agentic AI reality. First, Salesforce introduced its own AI agents back in late 2024, a suite of automation tools called Agentforce. Agentforce has grown rapidly, already reaching a $3.4 billion annualized run rate. However, that total still only accounts for about 7.5% of this year's revenue guidance. So while Agentforce's growth is positive, it's still relatively small, and wouldn't necessarily offset deterioration in the rest of the business.

To augment its AI capabilities, Salesforce also made several "tuck-in" acquisitions during the first half of the year. In February, Salesforce announced the acquisition of Momentum Boost, a platform that enables the ingestion and analysis of unstructured data, including Zoom Communications video calls. In June, Salesforce announced the acquisition of M3ter, a metering and billing company that facilitates consumption-based pricing. If agents begin replacing more humans in corporate environments, one way software companies can continue to grow will be through consumption-based pricing, rather than "seat" based subscription pricing. So the M3ter buy could be consequential to that transition.

But the most consequential acquisition of the first half was Salesforce's $3.6 billion acquisition of Fin, a software company formerly known as Intercom. Fin is a customer service AI chatbot, and the company has already successfully pivoted from a traditional software subscription business to an agentic AI business that charges customers only for successful, fully automated outcomes. Moreover, Fin has built its own custom model, Apex, specifically for the customer service vertical, freeing Fin from having to pay Anthropic or OpenAI for its underlying intelligence.

Image source: Getty Images.

Despite the decline, management remains confident Will all these efforts enable Salesforce to adapt and thrive in an AI future? Only time will tell. However, Salesforce appears confident. During the first half, CEO Marc Benioff repeatedly said, in interviews and on earnings calls, that AI presents a massive growth opportunity for Salesforce rather than a disruption risk.

Not only did Benioff sound confident, but he and Salesforce's management team backed that sentiment up with a massive $25 billion accelerated share repurchase in March, part of a $50 billion total repurchase authorization. That repurchase quickly reduced Salesforce's shares outstanding by 10% over just a few days, though it also increased the company's debt load.

Despite a slight recent bounce in the stock, Salesforce shares still trade at less than 12 times this year's adjusted earnings per share estimates. That's a bargain if Salesforce can continue to survive and grow in the AI era; however, the answer to that overhanging question won't be answered for quarters, if not years.

Key Takeaways CRM's 5.8% drop trails industry gains as AI, interest rates, inflation and geopolitics weigh on software.Salesforce's Agentforce ARR surged 205% to $1.2B, while AI and Data ARR more than tripled to $3.4B.Salesforce expects 10-11% Q2 revenue growth and about 11% for FY27, while valuation looks cheaper. Salesforce Inc. (CRM - Free Report) shares have declined 5.8% over the past three months, underperforming the Zacks Internet – Software industry’s 5.7% gain. While the weak performance may concern investors, Salesforce is far from being the only software stock under pressure.

Several enterprise software names, including SAP SE (SAP - Free Report) , Adobe Inc. (ADBE - Free Report) and Workiva Inc. (WK - Free Report) , have also struggled during the same period. SAP, Adobe and Workiva have fallen 5.1%, 8.7% and 9.9%, respectively. The broad-based weakness suggests that investors are reassessing the software sector rather than losing confidence in Salesforce alone.

Salesforce 3-Month Price Return Performance
Image Source: Zacks Investment Research

The biggest overhang is the rapid rise of artificial intelligence, particularly agentic AI. These AI systems can automate complex business tasks with minimal human intervention, prompting investors to question whether the traditional software-as-a-service (SaaS) pricing model, which largely depends on per-user subscriptions, could face pressure over time. If enterprises eventually require fewer software users, subscription growth could slow across the industry.

At the same time, software companies continue to deal with a difficult macroeconomic backdrop. Higher interest rates, persistent inflation and geopolitical uncertainty have made businesses more cautious about technology spending. Many enterprises are taking longer to approve large software purchases, resulting in extended sales cycles across the industry.

Salesforce is naturally exposed to these trends because most of its revenues come from enterprise customers. Slower IT spending could delay new customer wins and reduce expansion opportunities. However, the recent pullback appears to reflect broader market concerns rather than any meaningful deterioration in Salesforce's business.

Salesforce Is Becoming More Than a CRM CompanySalesforce remains the global leader in customer relationship management software, according to Gartner. However, the company is no longer relying solely on its customer relationship management software for growth. It is transforming into a broader enterprise AI platform by combining customer data, collaboration tools and AI-powered automation.

This strategy has been built through both large and small acquisitions. Slack strengthened Salesforce's collaboration platform, and Informatica expanded its data management capabilities, while newer acquisitions such as Doti AI and Spindle AI are enhancing its AI offerings.

The company's biggest growth engine today is Agentforce. In the first quarter of fiscal 2027, Agentforce’s annual recurring revenues (ARR) surged 205% year over year to $1.2 billion, highlighting strong customer demand for Salesforce's AI agents.

The momentum extends beyond Agentforce. Combined AI and Data ARR, including Agentforce, Data 360 and Informatica Cloud, reached $3.4 billion in the first quarter, more than tripling from the year-ago period. Nearly half of Agentforce and Data 360 bookings came from existing customers, showing that Salesforce is successfully expanding relationships within its large installed customer base.

That matters because selling more products to existing customers is typically more profitable than acquiring new ones. It also demonstrates that enterprises are willing to spend more on Salesforce's AI platform despite the uncertain economic environment.

CRM’s Revenue Growth Shows Signs of ImprovementOne of the biggest investor concerns has been Salesforce's slowing growth. As the company became larger, revenue growth naturally moderated from the high-growth rates seen several years ago, leading many investors to believe Salesforce had entered a mature phase.

Recent results paint a more encouraging picture. First-quarter fiscal 2027 revenues increased 13.3% year over year, marking a noticeable acceleration from recent quarters. While Salesforce is still way behind its earlier hypergrowth phase, double-digit growth remains impressive for a company of its scale.

Management's guidance also reflects confidence in demand. Salesforce expects revenues to grow 10-11% in the fiscal second quarter and approximately 11% for the full fiscal year. Those projections are largely in line with Zacks Consensus Estimates and suggest that growth remains healthy despite a cautious enterprise spending environment.

Image Source: Zacks Investment Research

Salesforce’s Valuation Leaves Room for UpsideThe recent share price weakness has also made Salesforce's valuation more attractive. CRM currently trades at a forward 12-month price-to-earnings (P/E) ratio of 11.26, well below the industry average of 26.32.

Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research

Compared with peers, Salesforce also appears reasonably valued. SAP and Workiva trade at forward P/E multiples of 17.74 and 16.24, respectively, while Adobe trades at 8.36 times forward earnings. Although Adobe is cheaper, Salesforce's valuation looks attractive considering its improving growth profile and expanding AI business.

Final Thoughts: CRM Stock Seems Worth HoldingSalesforce still faces legitimate challenges. The software industry is adjusting to the rise of AI, enterprise customers remain cautious about spending, and macroeconomic uncertainty could continue to weigh on near-term demand.

However, the recent decline appears to reflect investor sentiment more than weakening fundamentals. Salesforce is rapidly building one of the industry's strongest enterprise AI platforms and is showing early signs of reaccelerating revenue growth. At the same time, its expanding AI ecosystem is creating new monetization opportunities while strengthening customer relationships.

With the stock trading at a meaningful discount to the broader software industry, much of the near-term uncertainty already appears to be reflected in the valuation. While volatility may persist, the company's long-term growth story remains intact. For existing investors, holding the stock continues to look like the more sensible strategy than selling into the recent weakness.

Salesforce carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Like virtually all software stocks, enterprise software-as-a-service (SaaS) giant Salesforce (CRM +5.41%) has been hit hard this year. Shares are down a stunning 42% on the year and now trade just slightly higher than 10 times this year's adjusted (non-GAAP) earnings per share guidance.

The decline is not unique to Salesforce, though; the entire software sector has been decimated due to fears over artificial intelligence's new ability to code as well as the best human engineers.

Software bulls would say that artificial intelligence (AI) could actually benefit certain software companies as long as they can pivot from a subscription model to a usage- or outcome-based model.

On that note, Salesforce just made an acquisition that has actually already made this transition and is now growing at triple-digit rates. Given that Salesforce needs to do the same, this acquisition isn't just about the acquiree's revenue and profits but also about the capabilities it could bring to the whole organization.

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What is Fin, and why did Salesforce buy it? On June 15, Salesforce announced it was buying customer service software company Fin, formerly known as Intercom, for $3.6 billion.

Some may think that Salesforce just acquired another "me too" customer service software suite. But Fin has proven itself to be more than that. When OpenAI released ChatGPT back in late 2022, Intercom founders Eoghan McCabe and Des Traynor went all in on artificial intelligence.

McCabe had a relationship with OpenAI even before ChatGPT debuted, and he was quick to introduce its new AI-powered software in early 2023. At first, the software was dedicated to helping customer service agents via automated summaries and inbox improvements. But when GPT-4 came out, Intercom decided to develop a fully customer-facing autonomous customer service agent called Fin and even renamed the company after it.

Fin has evolved to model-building and outcome pricing With years of expertise in customer service software and a strong focus in this area, Fin appears to have married its proprietary knowledge with the capabilities of new language models, making it a true, fully autonomous customer service agent.

At first, Fin used either OpenAI's ChatGPT or Anthropic's Claude as the underlying intelligence, then incorporated Fin's proprietary data and expertise to understand the complexities of a customer service call. When Fin launched, it resolved about 25% of customer service interactions. By May 2025, that had increased to 56%. Today, Fin's average resolution rate without human intervention averages 76%.

Image source: Getty Images.

What's really exciting about Fin is that in March, it unveiled its own proprietary model called Apex 1.0. So, whereas Fin was previously dependent on external large language models, it now has its own proprietary one built by Fin's 60-person AI technology team. Using its own vertical model specifically developed for customer service, Fin claims it's the highest-performing customer service model on the market, with faster time to first token and lower hallucinations than the large general models.

Just as important is that Fin has already transitioned to an outcome-based pricing model, where the customer pays only for fully automated customer service resolutions. That has resulted in reaccelerating growth for Fin, which saw its agentic annual recurring revenue (ARR) reach around $100 million and grow at 350% at the time of the transaction. Fin also had some legacy software ARR of around $300 million, bringing the total to $400 million. So, Salesforce is paying about 9 times sales.

But Salesforce is buying a lot more than that Of course, Salesforce isn't just buying Fin's growing ARR. Rather, it's buying a team of AI technologists who have already made the exact transition Salesforce needs to make -- from a recurring, subscription-based, human-driven software business to an outcome- or usage-based agentic AI software business powered by its own internally developed models.

The trepidation around that transition is why Salesforce has fallen to an extremely low valuation of just 10 times this year's earnings guidance. However, if Fin and Fin's team can help successfully deploy AI agentic capabilities across Salesforce's vast, far-reaching enterprise, that could very well ensure Salesforce's pivot is a success.

And if that happens, the stock has tremendous recovery potential from its current depressed valuation.

Few of the market's large-cap software names have fallen as hard this year as Salesforce (CRM +2.22%). The stock recently set a fresh 52-week low and is down about 40% year to date, leaving it among the worst performers in enterprise software. What makes the slide unusual is that the underlying business keeps setting records.

The company reported results for its fiscal first quarter of 2027 (the period ended April 30, 2026) in late May, and the numbers were strong. So why does the stock keep falling?

The answer has little to do with the latest quarter and almost everything to do with a single fear: that artificial intelligence (AI) agents will erode the per-seat subscriptions that software companies like Salesforce have long sold. If a handful of agents can do the work of many employees, the worry goes, customers will eventually need fewer paid seats. In addition, there's an overarching fear that AI will increasingly handle what software companies do today.

Image source: Getty Images.

What the latest quarter actually showed The fiscal first-quarter results suggest that fear may be overblown, at least for now. Salesforce's revenue rose 13% year over year to $11.1 billion, though about 4.4 percentage points of that growth came from its recent Informatica acquisition. Stripping that out, organic growth was closer to the high-single-digit pace the company has run at for a while.

More telling, however, was what happened beneath the top line. Salesforce's AI and data products generated $3.4 billion in annual recurring revenue (ARR), up about 200% from a year earlier, and its Agentforce agentic AI offering alone crossed $1 billion in ARR after more than tripling. And rather than shrinking, the seat count in the company's largest products grew.

"Our largest applications, sales and service, saw year-over-year seat growth with humans and agents both expanding on the platform," said Salesforce chief operating and finance officer Robin Washington in the company's fiscal first-quarter earnings call.

That dynamic, with customers paying for more seats rather than fewer even as they adopt automation, sits at the center of the bull case. Salesforce is also leaning hard into new ways to charge for AI, including usage-based pricing and a recent $3.6 billion deal to acquire Fin, an AI customer service platform.

The profit picture looks healthy, too. Salesforce's non-GAAP (adjusted) operating margin reached a record 34.8%, and the company generated $6.6 billion in free cash flow during the quarter. Salesforce also returned $27.5 billion to shareholders, the bulk of it through a $25 billion accelerated share repurchase that was the largest in its history. That buyback shrank the share count by about 10% from a year earlier.

Is the sell-off a buying opportunity? Not everything in the quarter, however, was reassuring. Management pointed to ongoing weakness in the company's commerce and Tableau businesses. Salesforce has also cut staff repeatedly over the past year as it reorganizes around AI. Of course, this can be viewed as both a negative and a positive.

Additionally, investors will need patience. Management is guiding for organic revenue growth to reaccelerate in the back half of the fiscal year -- a recovery investors will have to wait to see.

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The real problem for the stock recently may have been valuation. Only now is the stock starting to look reasonably priced in light of the risks of technological change that software companies face. After the sell-off, Salesforce trades at a forward price-to-earnings ratio of about 12, using the midpoint of management's full-year adjusted earnings outlook. For a profitable business still growing revenue at a double-digit rate and expanding its margins while buying back stock aggressively, that is a fairly attractive multiple.

So, is it finally time to buy? I'm staying cautious. The numbers increasingly suggest AI is acting as a catalyst for Salesforce rather than a threat. But the broader uncertainty over how AI will reshape software isn't going away soon, and that overhang could keep a lid on the valuation premium investors are willing to pay for software stocks for years, even ones executing as well as this one.

Overall, buying a small, undersized position here could make sense for investors comfortable with the AI disruption overhang that could plague the stock for years. From there, I'd only build the position into a meaningful stake if the stock falls significantly further. Approaching the stock this way gives investors the flexibility to profit if things go well, and to potentially keep buying a good business at an even better price.