Salesforce stock tumbled after the enterprise software maker reported fiscal second-quarter earnings that topped estimates and revenue that edged by views. However, its sales guidance for the October quarter came in below expectations amid its artificial intelligence product push.
The July-quarter Salesforce earnings report was released after the market close on Wednesday. Salesforce earnings rose 13% to $2.91 per share on an adjusted basis. Also, the San Francisco-based enterprise software firm said revenue climbed 10% to $10.2 billion.
Salesforce stock analysts expected the company to report earnings of $2.78 a share on revenue of $10.14 billion.
On the stock market today, Salesforce stock fell more than 6% to near 240.
Slowing Cloud Growth
"While the results were steadier (than Q1), we think lingering investor concern about ongoing deceleration in the core clouds, and in subscription revenue more broadly, will remain," said BMO Capital Markets analyst Keith Bachman in a report. "More specifically, we think investors are concerned that core cloud growth, given the large size of the base, continuing to decelerate, will offset any growth from Agentforce or data and AI. We think the company remains in discovery related to AI pricing and packaging so that the core clouds and Agentforce can coexist to be net additive to growth."
A key financial metric, current remaining performance obligations, known as CRPO bookings, topped views. In Q2, CRPO bookings rose 11% to $29.4 billion vs. estimates of $29.15 billion. CRPO bookings are an aggregate of deferred revenue and order backlog.
Bank of America analyst Brad Sills maintained a buy rating on Salesforce stock.
Salesforce Stock: Agentforce Adoption Key
"Q2 results are not enough to dispel the bear case that Salesforce's business could be under pressure from Agentic AI. However, backlog is growing a steady 11% before material contribution from AI/Agentforce," he said in a report.
Sills added: "With gradual continued Agentforce traction, we see line of sight to 11% to 12% backlog growth in fiscal 2027. A number of trends back this scenario: large pilot deals expanded to 120 enterprises from 20; 60% quarter-over-quarter growth in Agentforce customers moving from pilot to production; and healthy builds in Europe. As these large and mid-sized organizations enter phase 2 of Agentforce deployments, we see a natural acceleration in backlog and subscription revenue near term.."
For the current quarter ending in October, Salesforce projected revenue in a range of $10.24 billion to $10.29 billion. At the midpoint, the sales outlook came in below estimates for $10.29 billion.
Heading into the Salesforce earnings release, CRM stock had retreated about 23% this year. Further, Salesforce announced a $20 billion increase to its existing share-repurchase program, bringing the total authorized to $50 billion.
At UBS, analyst Karl Kierstead said in a report: "For the second quarter in a row, Salesforce reaffirmed (didn't raise) the fiscal 2026 total revenue growth outlook of 8% despite the strong growth in the AI/data segment and positive commentary about the second half pipeline and bookings momentum. This in our view speaks to a quite mature CRM software market and a reality that 'front-office AI' investments are simply very early-stage. We're content staying patient on the stock until we can more clearly see a path back to 10%-plus growth."
Salesforce Stock Technical Ratings
Salesforce offers access to business software applications based on a subscription model. Its software helps businesses organize and handle sales operations and customer relationships.
In addition, the company has expanded into marketing, customer services and e-commerce. Some analysts expect upside from Salesforce's push into the life sciences market. The software maker is transitioning from a software-as-a-service business model to consumption-based pricing for AI agents.
"Contrary to prevailing investor concerns, we don't believe AI will disrupt Salesforce's SaaS business but instead will become a multi-year tailwind," said Goldman Sachs analyst Kash Rangan in a report.
Salesforce will host its annual Dreamforce conference Oct. 14-16. At the event, more AI announcements are expected.
In a move to boost its artificial intelligence strategy, Salesforce recently agreed to buy data-management software maker Informatica in an all-cash deal valued at $8 billion.
Further, Salesforce stock is among IBD's AI stocks to watch.
Meanwhile, CRM stock owns a Composite Rating of 58 out of a best-possible 99, according to IBD Stock Checkup.
Salesforce stock holds an Accumulation/Distribution Rating of D+. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.
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