Salesforces underwhelming earnings wont be enough to stem the AI software slide
Salesforce ‘s lukewarm fourth-quarter results left a sour taste in analysts’ mouths and will do little to stem the software giant’s year-to-date sell-off. The customer service software maker’s soft revenue guidance for the full year overshadowed beats on the top and bottom line for the last quarter. Salesforce expects revenue for fiscal 2027 to land between $45.8 billion and $46.2 billion, with the lower end of this range trailing behind Wall Street’s projection of $46.06 billion. The company also expects adjusted earnings of between $13.11 to $13.19, while analysts polled by LSEG had penciled in $13.12 per share. CRM YTD mountain Salesforce shares in 2026 Shares were last up more than 2% Thursday, although in the premarket session they had shed close to 4%. The stock has plummeted more than 25% this year, swept up amid a broader software sell-off as fears of artificial intelligence disruption have trampled the industry. Year to date, the iShares Expanded Tech-Software Sector ETF (IGV) has plunged 22%. Salesforce has been trying to expand the adoption of its Agentforce platform, which uses artificial intelligence to automate customer service. While the company said that annualized Agentforce revenue exceeded $800 million last quarter, analysts fear that this is still ramping too slowly. “CRM is a mature business in a mature and competitive market. We think Agentforce is still in early stage of adoption, and therefore not a near-term driver of re-acceleration. Large M & A remains a concern. The result is limited upside and meaningful downside risk,” wrote Bernstein analyst Mark Moerdler. He rates the stock as underperform. UBS analyst Karl Keirstead added that while Agentforce looks promising, the issue lies with the overwhelming majority of where the rest of Salesforce’s revenue stems from. He said that while Agentforce accounts for roughly 2% of revenues, “the issue is that the other 98% of revs is under pressure.” Contributing factors there include a tough apps spending backdrop as businesses focus on AI and data initiatives, as well as weakness in certain Salesforce segments, including marketing and commerce, Keirstead said. He is neutral on the stock. Likewise, Goldman Sachs analyst Gabriela Borges argued that differentiated outcomes with Agentforce, versus Salesforce’s competitors, will be the key driver for the stock going forward. The analyst has a buy rating on the stock. “We believe the key debate going forward will be to what extent Salesforce’s domain expertise can drive better outcomes with Agentforce than newer competitor solutions, and whether Salesforce can monetize these outcomes to drive improving/durable growth over the next several years,” she wrote. Bottom line, analysts’ long-term stance towards Salesforce remained mixed across the board, with several lowering their price targets for the stock. Here’s how Wall Street’s biggest shops reacted. Bernstein: underperform rating, $194 price target The investment firm’s target, down from $223, implies about 1% upside from Salesforce’s Wednesday close of $191.75. “We have been concerned that Salesforce is a mature business in a mature market. While valuation has come down and expectation around AgentForce is being adjusted, we continue to worry about the longer term share loss risk from being the biggest incumbent in the CRM market, as well as the potential of big expensive M & A’s considering the hot M & A market and the company’s acquisitive history.” UBS: neutral, $200 UBS’ forecast offers upside of 4%. “Salesforce posted a print that generally lined up with the feedback from our checks — strong Agentforce traction but muted growth across the rest of the core portfolio. In c/c and excluding the lift from the Informatica deal, revs growth of 6% in 4Q/Jan and guide for 6-7% in 1Q/Apr and 7-8% in FY27 simply fell short of our estimates by 1-2 points and could serve to take the wind out of the two-day rally in SaaS/apps stocks. We’re content staying Neutral-rated on the stock until an acceleration becomes more visible.” Wells Fargo: equal weight, $210 Wells Fargo’s target, lowered from $235, calls for nearly 10% upside going forward. “Our ests are left largely unchanged as Agentforce strength was offset by less 4Q upside than expected. Though mgmt commentary continues to call for 2H’27 reaccel, we await clearer signs given leading indicators still fading and maintain EW.” Deutsche Bank: buy, $255 The bank’s forecast, down from $325, is 33% above Salesforce’s Wednesday close. “Consistent with our field work heading into earnings, Salesforce reported a mixed quarter but provided some encouraging signs of improved Agentforce adoption. Headline metrics were underwhelming, with Subscription revenue a touch ahead, driven by better Informatica performance and cRPO growth that only met guidance and decelerated ~1pt from last quarter to ~9% y/y organic cc, stoking concerns about the core business.” Barclays: overweight, $265 The bank’s price target implies the stock could rise 38% from here. “We expect a relatively muted share price reaction to CRM’s Q4 results. [Current remaining performance obligation] was better than consensus, and guidance was solid with no major surprises, so we will need to wait until later in the year to see proper inflection points.” Goldman Sachs: buy, $281 Goldman Sachs’ price target equates to about 47% upside. “CRM is indicated -5% AH after reporting 4QFY results. Revenue and subscription revenue were in line with the Street, EBIT margin was in line, and cRPO grew 16%/11% USD/CC vs. the Street at 14%. FY27 revenue and subscription revenue were guided in line with the Street at 11%, while EBIT margin was guided 60bps below. Salesforce also announced a $50bn repurchase authorization (~30% of market cap). We believe the key debate going forward will be to what extent Salesforce’s domain expertise can drive better outcomes with Agentforce than newer competitor solutions, and whether Salesforce can monetize these outcomes to drive improving/durable growth over the next several years.” Morgan Stanley: overweight, $287 The bank’s price target corresponds to an upside of 50%. “Organic cRPO inline with guidance likely caps the stock near-term, but management expressed conviction in accelerating growth via a specific target (2H27), leading indicators in [net new annual order value] & an expansion of repurchase authorization to $50B. At 11X [enterprise value]/ CY27 [free cash flow], it pays to wait for the turn.” JPMorgan: overweight, $320 JPMorgan’s price target, down from $365, calls for 67% upside going forward. “Q4 results static, but Salesforce is clearly seeing internals picking up, prompting stronger & earlier conviction in organic re-acceleration.”
