(Bloomberg) — Salesforce Inc. shares have never been cheaper, but investors still aren\u2019t buying amid rising fears about artificial intelligence eroding the company\u2019s growth prospects.<\/p>\n
The maker of customer relationship management software reports earnings after the bell, and has recently pointed to better times ahead, forecasting double-digit revenue growth in the coming years. However, Wall Street isn\u2019t optimistic that the results will do much to alter the cautious narrative surrounding the stock.<\/p>\n
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\u201cWe need a change in sentiment for investors to take a look, and that will be driven by stability and an improvement in topline growth,\u201d said Hilary Frisch, senior research analyst at ClearBridge Investments.<\/p>\n
Salesforce\u2019s stock price has been hammered by pessimism all year, plunging 30% in 2025 to make the company the second-worst performer in the Dow Jones Industrial Average and putting it among the 25 worst in the S&P 500 Index. Meanwhile, shares of software companies that are perceived AI winners like Microsoft Corp., Oracle Corp. and Palantir Technologies Inc. are thriving.<\/p>\n
The selloff has taken the company\u2019s market valuation to the lowest it has been since Salesforce went public in 2004. The stock currently trades at less than 19 times estimated earnings over the next 12 months, far below its 10-year average of 47 and less than the S&P 500\u2019s multiple of roughly 22.<\/p>\n
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\u201cIf its forecast is true, then the valuation isn\u2019t fair and likely represents an attractive opportunity for long-term investors,\u201d Frisch said. \u201cWhile I think we\u2019ll get that stability and improvement over the coming 12 to 18 months, I don\u2019t know that this report will be the catalyst for the story changing, as concerns over AI disruption remain very present.\u201d<\/p>\n
While Salesforce\u2019s forecast eased concerns about an imminent slowdown, it didn\u2019t address Wall Street\u2019s primary concern: That offerings from AI-native companies like OpenAI will reduce demand for its services and pricing power.<\/p>\n
Salesforce does have AI products of its own, notably Agentforce, which automates some workloads. But investors aren\u2019t expecting to see much of a financial contribution from them yet, which keeps the company\u2019s perceived ability to thrive in the AI era in doubt. As a sign of Wall Street\u2019s wait-and-see approach, consensus estimates for the company\u2019s earnings and revenue next year haven\u2019t budged in 12 months.<\/p>\n
\u201cThough there is ample pipeline interest in Agentforce\/Data Cloud, Agentforce production remains limited,\u201d Citi analyst Tyler Radke wrote in a note to clients on Nov. 26. \u201cWe await wider rollouts and evidence of commercialization before considering turning more constructive.\u201d<\/p>\n
The company isn\u2019t alone in feeling the heat. Software-as-a-service (SaaS) stocks have been broadly pressured this year on concerns over AI disruption, with a Morgan Stanley basket tracking the group down 12% in 2025.<\/p>\n
<\/p>\n
In many ways the market is getting ahead of itself, as the damage from AI has yet to show up in earnings reports. Salesforce is expected to show net income growth of 11% this fiscal year on an 8.8% gain in revenue. And both are expected to accelerate in each of the company\u2019s next three fiscal years, with net income rising 20% by fiscal 2029 on the back of an 11% jump in revenue.<\/p>\n
With that in mind, some Wall Street pros think the concerns are misplaced. The SaaS group is trading at a 30% to 40% discount to its fundamentals, according to a research note from KeyBanc Capital Markets analyst Jackson Ader on Nov. 24. The valuations \u201cimply growth falls off a cliff,\u201d even though the worst-case scenario is \u201cunlikely\u201d and \u201cwe believe we\u2019ll be pleasantly surprised,\u201d Ader wrote.<\/p>\n
He may have a point. The average analyst price target for Salesforce over the next 12 months is around $325, which implies an almost 40% gain from its $235 price now and puts it among the top 10 components of the S&P 500 Information Technology Index by that measure.<\/p>\n
\u201cSentiment toward SaaS companies has gotten pretty draconian, but there are some companies that are mission critical, and others where it wouldn\u2019t shut your business down if you replaced them with AI,\u201d said Brad Conger, who oversees $25 billion as chief investment officer at Hirtle Callaghan.<\/p>\n
\u201cSalesforce is closer to the mission-critical side of things, and it is one of the companies I think investors should be looking at, but there are no absolutes right now,\u201d he added. \u201cIt remains a very mixed field, and it will take a while for companies to prove that they\u2019ve defended themselves against AI \u2014 or that they can be winners.\u201d<\/p>\n
Tech Chart of the Day<\/p>\n
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A credit-risk gauge on Oracle Corp. debt closed at the highest level since the financial crisis after a flood of bond sales from tech giants amplified concerns that a bubble is forming in the artificial-intelligence industry.<\/p>\n
Top Tech Stories<\/p>\n
Amazon.com Inc.\u2019s cloud unit raced to get the latest version of its artificial intelligence chip to market, renewing efforts to sell hardware capable of rivaling products from Nvidia Corp. and Google.<\/p>\n
Marvell Technology Inc. rallied in late trading after reassuring investors that its custom chip-design unit is winning repeat orders, signaling continued growth as the company benefits from runaway spending on AI computing.<\/p>\n
CrowdStrike Holdings Inc. raised its fiscal 2026 guidance, signaling resilient demand for the company\u2019s expanding portfolio of artificial intelligence-enabled cybersecurity products.<\/p>\n
OpenAI Chief Executive Officer Sam Altman is redirecting internal resources to speed up improvements to ChatGPT, declaring a \u201ccode red\u201d situation that will delay work on other initiatives, according to people familiar with the matter.<\/p>\n
Earnings Due Wednesday \u00a0 \u00a0 \u00a0 \u00a0 <\/p>\n
–With assistance from Caleb Mutua, Subrat Patnaik and David Watkins.<\/p>\n
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\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — Salesforce Inc. shares have never been cheaper, but investors still aren\u2019t buying amid rising fears about…\n","protected":false},"author":2,"featured_media":165856,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,1877,4401,85,46,99069,936,9505,136,125],"class_list":{"0":"post-165855","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-bloomberg","12":"tag-companies","13":"tag-il","14":"tag-israel","15":"tag-market-valuation","16":"tag-oracle-corp","17":"tag-palantir-technologies-inc","18":"tag-salesforce","19":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/165855","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=165855"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/165855\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/165856"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=165855"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=165855"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=165855"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}