CRM: Expanding AI Customer Engagement Will Drive Durable Long Term Shareholder Value

Analysts have inched up their Salesforce price target, with fair value rising roughly $3 to about $330 per share, as modestly stronger long term revenue growth assumptions and a slightly lower discount rate more than offset a marginally softer profit margin outlook amid shifting competitive dynamics in customer engagement and AI driven marketing tools.

Analyst Commentary

Analyst sentiment on Salesforce remains mixed as the competitive backdrop in customer engagement and AI driven marketing tools evolves rapidly, leading to both upward and downward adjustments to growth and execution assumptions embedded in valuation models.

Bullish Takeaways

• Bullish analysts continue to view the broader customer engagement and marketing software category as one of the most attractive parts of enterprise software for monetizing Gen AI. This supports the notion that Salesforce has a large and expanding profit pool to target despite recent competitive headlines.
• Recent customer conversations across the space, including those touching on AI powered engagement pilots and proofs of concept, suggest that enterprises are moving from experimentation toward budgeted deployments into 2026. This reinforces a constructive medium term demand backdrop for Salesforce cloud offerings.
• The expectation that AI driven tools will drive higher conversion rates and more personalized engagement at scale underpins assumptions of sustained high single digit to low double digit revenue growth for Salesforce, even if share shifts toward newer platforms at the margin.
• Valuation support is aided by the view that front office marketing and customer engagement platforms remain mission critical. This should help Salesforce defend renewals and upsell AI capabilities, limiting downside to cash flow forecasts embedded in current price targets.

Bearish Takeaways

• Bearish analysts point to Salesforce being removed from some high conviction lists and to at least one downgrade to a more neutral rating, signaling reduced confidence that the company can outperform peers in the current competitive cycle.
• New AI native tools, such as recently announced inbound marketing offerings, are viewed as intensifying pressure across front office marketing suites, with investors expecting potential share loss or slower net new wins for incumbents including Salesforce.
• Heightened competition from focused customer engagement platforms, which some believe are better positioned to capture near term Gen AI monetization, raises concern that Salesforce may need to invest more aggressively. This could weigh on margin expansion assumptions.
• The combination of softer sentiment, increased AI headline risk, and uncertainty around Salesforce relative positioning in next generation engagement workflows has led some bearish analysts to apply more conservative multiples and to trim upside scenarios in their valuation work.

What's in the News

• Salesforce's Slack unit will end direct service in China and instead rely on Alibaba to deliver Slack functionality in the market, reflecting a shift in strategy for its collaboration platform in a highly regulated region (The Information).
• Salesforce told customers it will not negotiate with or pay a ransom to the ShinyHunters hacker group after a security incident involving alleged theft of client data, emphasizing a hard line on extortion while it manages potential data exposure (Bloomberg).
• Salesforce launched Agentforce 360 globally, positioning its AI agent platform as the core of an "Agentic Enterprise" model, with tightly integrated data, workflow, and Slack collaboration capabilities designed to automate sales, service, IT, and industry-specific processes.
• The company expanded strategic AI alliances with OpenAI, Google, and Anthropic, making their frontier and Gemini models preferred options inside Agentforce 360 and Slack, and targeting regulated industries and complex, multistep enterprise workflows.
• Salesforce updated fiscal 2026 guidance to 9% to 10% year over year revenue growth, alongside a GAAP operating margin outlook just above 20%, describing a focus on both revenue expansion and profitability while it ramps AI investments.

Valuation Changes

• Fair Value: risen slightly from approximately $327 per share to about $330 per share, reflecting a modest upward revision in intrinsic value estimates.
• Discount Rate: fallen slightly from roughly 8.60% to about 8.56%, modestly increasing the present value of projected future cash flows.
• Revenue Growth: risen slightly from around 9.7% to just over 10.0%, indicating a small upgrade to long term top line expectations.
• Net Profit Margin: fallen marginally from about 19.9% to roughly 19.8%, suggesting a slightly softer long term profitability outlook.
• Future P/E: fallen slightly from approximately 34.8x to about 34.4x, implying a modestly lower multiple applied to forward earnings in valuation models.