<\/p>\n
Salesforce has spent much of the past year trying to convince investors that the next version of enterprise software will be built around AI agents. A new bearish note says that story still has a harder test in front of it.<\/p>\n
Salesforce (CRM) reported a record fiscal first quarter, giving bulls enough numbers to point to without fully quieting the growth debate. The company said revenue rose 13% from a year earlier and 12% in constant currency to $11.1 billion for the quarter ended April 30.<\/p>\n
The company also reported current remaining performance obligation of $33.6 billion, up 14% from a year earlier and 13% in constant currency. GAAP diluted earnings rose 52% to $2.42 a share, while non-GAAP earnings rose 50% to $3.88 a share.<\/p>\n
In a Bank of America note given to TheStreet, analyst Tal Liani reiterated an Underperform rating on Salesforce and kept the firm\u2019s $160 price objective. Based on the $177.51 share price listed in the note, that target implies about 9.9% downside.<\/p>\n
BofA says Salesforce growth still looks muted<\/p>\n
BofA focused more on the path implied from here than on the reported quarter. The firm described the quarter as largely uninspiring, with cRPO growth of 13% in constant currency and revenue growth of 12% in constant currency, both in line with Wall Street expectations.<\/p>\n
The organic growth line creates a sharper concern because it looked more muted once Informatica was stripped out. <\/p>\n
BofA said organic revenue, excluding Informatica, rose 7.1% in constant currency from a year earlier, while second-quarter guidance implies a back-end-loaded second-half acceleration.<\/p>\n
More SalesforceBofA resets Salesforce stock price target with sobering AI verdictMichael Burry plans to buy Salesforce stock for crucial reasonDoes Salesforce pay a dividend? Its yield and payouts explained<\/p>\n
Salesforce\u2019s AI push remains the company\u2019s strongest counterargument. Chair and CEO Marc Benioff called agentic AI \u201cthe biggest growth opportunity\u201d for Salesforce and its customers, while the company said Agentforce and Data 360 annual recurring revenue reached nearly $3.4 billion.<\/p>\n
That figure included $1.2 billion in Agentforce ARR, up 205% from a year earlier, and $1.1 billion in Informatica Cloud ARR. <\/p>\n
Salesforce also said it has delivered 3.8 billion Agentic Work Units to date across Agentforce and Slack, with that figure growing 111% quarter over quarter.<\/p>\n
The company also said that more than half of Agentforce and Data 360 bookings came from existing customers in the quarter. The company also said bookings from Agentforce One Edition and Agentforce for Apps, premium products tied to Sales and Service, grew nearly 60% from a year earlier.<\/p>\n
Bank of America analyst Tal Liani reiterated an Underperform rating on Salesforce and kept the firm\u2019s $160 price objective.<\/p>\n
SOPA Images via Getty Images<\/p>\n
Agentforce momentum has not ended the debate<\/p>\n
BofA still found reasons to stay cautious. The firm said early adoption has been helped by Flex offerings, while Data 360 ARR grew 5% quarter over quarter to $2.2 billion.<\/p>\n
The problem, in BofA\u2019s view, is that the mature parts of the business are moving too slowly. The note said Agentforce Apps, which represent about 65% of revenue, grew just 0.3% quarter over quarter and has posted 0% to 2% sequential growth over the past three quarters.<\/p>\n
The firm also said softness persists in Commerce and Tableau, reflected in Salesforce\u2019s in-line second-quarter cRPO growth guidance of 13% in constant currency.<\/p>\n
That puts more weight on the AI transition. Salesforce describes Agentforce as a way for companies to build and deploy AI agents that can respond to inputs, make decisions, and take action autonomously across business functions.<\/p>\n
Salesforce has also said its AI products bring additional risks tied to adoption, governance, accuracy, computing costs, legal liability, and competition. BofA\u2019s concern goes one step further, with the firm warning that agentic AI could pressure the seat-based monetization model that historically helped drive Salesforce\u2019s expansion.<\/p>\n
Salesforce stock still has a higher bar<\/p>\n
Margins offered some help in the quarter. Salesforce reported a non-GAAP operating margin of 34.8%, and BofA said that it beat its estimate by 140 basis points, helped by expense timing.<\/p>\n
The valuation call reflects that caution. BofA said its $160 price objective is based on 9 times its calendar 2027 enterprise value to free cash flow estimate, near the low end of the software peer average range of 8 times to 14 times.<\/p>\n
Salesforce is still producing strong profits, returning cash to shareholders, and building a large AI business. BofA\u2019s message is that investors may need clearer evidence that those AI gains can restart core growth before the stock deserves a bigger multiple.<\/p>\n
Related: Salesforce faces vital AI test in upcoming earnings<\/p>\n
#Analyst #warns #Salesforce #problem<\/p>\n","protected":false},"excerpt":{"rendered":"
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