Salesforce still looks mispriced to me.
At around $174, the market is acting as if growth has structurally broken, while the underlying business still throws off very serious cash. FY26 revenue came in at $41.5 billion and free cash flow reached $14.4 billion, which is not what a weak software company looks like. On top of that, Salesforce returned $14.3 billion to shareholders, including $12.7 billion in buybacks, and also increased its dividend. That combination matters. It shows a company with both scale and flexibility.
The key point for me is that Salesforce should not be judged on book value. This is not a balance sheet story. It is a recurring revenue, margin and cash flow story. That is why a DCF is the right lens here, not NAV. When I run it that way, I get an intrinsic value of roughly $310 per share. After applying a 15% safety margin, my 12-month base-case price target comes out at $263.53.
That still leaves meaningful upside from the current share price.
I think the market is mainly stuck on two concerns. First, near-term cloud growth is no longer exciting enough for a company of this size. Second, there is still uncertainty around how quickly Agentforce and the broader AI proposition will translate into tangible revenue. Those are fair concerns, but I do not think they justify the current valuation gap. The business remains highly cash generative, margins are solid, and management still has room to keep buying back stock aggressively.
My bull case is $346.50. That assumes Agentforce monetisation improves faster, cross-sell benefits from Informatica start to show, and the market becomes willing to re-rate the stock more like a high-quality software compounder again. My bear case is $174.00, which is effectively where the stock trades now. That tells me a lot of pessimism is already reflected in the price.
Technically, the setup is less attractive than the fundamentals. The stock is trading below both its 50-day and 200-day moving averages, and momentum is still weak. So I do not think the chart is confirming the valuation case yet. But that is also often where the opportunity starts to build, especially in large-cap software when sentiment becomes too negative relative to cash flow reality.
Overall, I see Salesforce as undervalued. Not because it is a perfect story today, but because the market is pricing it as if the business has lost its edge, while the financials suggest otherwise. For me, this is still a high-quality platform with strong recurring revenues, robust free cash flow and optionality from AI that is not fully reflected in the current share price.
My 12-month base-case valuation remains $263.53 per share.
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