‘Salesforce has always been sticky with its customers, and I think Agentforce is going to be like superglue’
A positive read could not only revive the stock, which has trended lower this year, but reassure investors about AI’s potential to drive growth and efficiency more broadly.
“AI agents are now at the forefront of the software trade, and this is the first quarter where we should see hard numbers,” said Clayton Allison, portfolio manager at Prime Capital Financial.
Salesforce’s previous report came in better than expected on key metrics, thanks in large part to AI, sparking a rally that took shares to a record. However, it failed to build on that rally, and is down 16 per cent since that December release.
Last week was the worst for the stock since August, and shares closed at their lowest since November on Monday. The stock is down almost eight per cent this year, underperforming both the broader market and an index of software companies this year.
Despite that slump, the company is seen as well positioned to deploy AI agents into its software for such functions as customer service, scheduling, and lead scoring. It has been aggressive with the strategy, hiring workers to sell the product even as it cuts jobs elsewhere.
AI agent tools are proliferating; OpenAI released a research-focused one earlier this month. However, Wall Street is positive on Saleforce’s ability to capitalize. Morgan Stanley & Co. LLC sees it “in the right place for the shift towards Agentic Computing,” while The Bank of Nova Scotia wrote that checks “highlighted a clear uptick in customers expanding their spend with Salesforce” as a result of Agentforce, although it caveatted that near-term growth “is still an open question” as many customers remain in the testing stage.
According to data compiled by Bloomberg, 75 per cent of software companies have beaten earnings expectations this reporting season, while about 69 per cent have for revenue. For the overall tech sector, the beat rates stand at 84 per cent and 71 per cent, respectively.
That, coupled with the newness of Agentforce and the stock’s recent underperformance, could mean that expectations are low going into this report, while recent management changes may temper how aggressive the company will be with its outlook.
As shares look like a relative bargain among megacap AI stocks, an upside surprise could be a catalyst. The stock trades at 27 times estimated earnings, almost half their 10-year average. It trades at a discount to both the S&P 500 tech sector index and the software index. The stock is 30 per cent below the average price target, making for one of the highest implied returns in tech among the next 12 months.
“The multiple looks pretty reasonable given Salesforce’s stable and predictable growth, especially since you can bank on an inflection in the next couple of quarters from Agentforce,” said Eric Clark, portfolio manager at Accuvest Global Advisors Inc., who expects the stock to top US$500 over the next couple years, compared with its Monday close just above US$308.
He stressed that while near-term results may not show much uplift from Agentforce, the long-term potential is strong, especially if low-cost AI models such as China’s DeepSeek accelerate adoption of AI services and functions more broadly.
“Salesforce has always been sticky with its customers, and I think Agentforce is going to be like superglue,” he said. “It is going to build massive momentum, and even if it takes more time than the market hopes, I don’t think anyone doubts this will be a meaningful part of its business over time.”
—With assistance from Subrat Patnaik.