How Could Salesforce’s Genesys AI Investment Talks Affect Its 2025 Market Value?

If you already own Salesforce stock, or if you are wondering if now is the right time to jump in, you are not alone. Salesforce has been on investors' radars for years thanks to its category-defining cloud software, and every major move triggers plenty of debate. In the last year, though, CRM’s price action has felt a bit like a rollercoaster. After climbing an impressive 41% over three years, the stock saw a one-year total return of -5.5% and has slid more than 25% year-to-date. What explains this volatility? Recent news has stirred the pot even more. From talks with ServiceNow about investing $750M in Genesys (a significant play in AI software) to U.S. military software project opportunities, Salesforce is staying in the headlines. But analyst reactions have been mixed. BMO Capital, for instance, recently trimmed their price target and expressed tempered optimism about some of the company’s new initiatives, such as Data Cloud. Still, despite its recent volatility, Salesforce is currently trading at a 21.9% discount to its estimated intrinsic value and a 40% discount to analyst price targets, fueling speculation that the downside risk may be fading and that growth potential remains. Here is the point to consider. On a common six-point valuation check, Salesforce scores a five, indicating it appears undervalued in nearly every major respect. Deciding whether that makes CRM a buy takes some digging. Let’s walk through the mainstream approaches for valuing the stock, with an additional insight: by the end of this article, we will introduce an even smarter way to judge whether CRM’s current price is too good to pass up. Salesforce delivered -5.5% returns over the last year. See how this stacks up to the rest of the Software industry.

Approach 1: Salesforce Cash Flows

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future free cash flows and then adjusting them back to today’s dollar value. It is a tried and tested way to judge whether a stock’s price is justified given what the business is expected to generate over time.

For Salesforce, the latest-twelve-month Free Cash Flow is $12.53 Billion. Analysts see this figure rising steadily, with estimates hitting $18.38 Billion by 2030. These projections are based on a blend of historical trends and expert consensus on future growth rates.

When all these forecasted cash flows are discounted back to the present, the DCF model pegs Salesforce’s intrinsic (fair) value at $315.07 per share. Compared to the current share price, this suggests Salesforce is trading at a 21.9% discount. In other words, by these calculations, the stock is 21.9% undervalued.

Simply put, the math says there could be real upside for investors if these cash flow projections play out.

Result: UNDERVALUED

Our DCF analysis suggests Salesforce is undervalued by 21.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: Salesforce Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for evaluating profitable companies like Salesforce because it shows how much investors are willing to pay for each dollar of the company’s earnings. Generally, higher growth expectations or lower risk can justify higher PE ratios, while more stable or slower-growing companies tend to have lower PE ratios.

Currently, Salesforce trades at a PE ratio of 37.9x. For comparison, this is higher than the average among its software industry peers, which is 36.5x, but lower than the broader peer group average of 54.5x. This puts Salesforce somewhere in the middle, neither clearly overpriced nor particularly cheap by basic comparison.

The analysis becomes more detailed when using Simply Wall St’s Fair Ratio, which takes into account factors such as Salesforce’s earnings growth, margins, and risks to estimate what the PE ratio “should” be. The Fair Ratio for Salesforce is 44.3x, which is above its current PE. This indicates that, given its fundamentals and outlook, Salesforce could reasonably trade at a higher earnings multiple than it currently does.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Salesforce Narrative

A Narrative is your personal story behind the numbers, combining your outlook for a company, such as your own fair value, future revenue, earnings, and margins estimates, with its unique circumstances or trends to give context to the data.

Unlike traditional approaches that only look at ratios or financial models, Narratives connect the “why” of a company’s journey with a financial forecast and a calculated fair value. This makes the entire investment decision process more transparent and logical.

On Simply Wall St, Narratives are simple and accessible. Millions of investors are using them to frame their decisions, share insights, and gauge sentiment within a supportive community.

By tying together a company's evolving story, its numbers, and regular market updates, Narratives help you decide whether to buy or sell by directly comparing a stock’s fair value against its current price.

Importantly, your Narrative adapts in real time as new news, results, or events affect the outlook, ensuring your decisions stay as up-to-date as the market itself.

• For Salesforce, one investor’s Narrative might forecast strong AI-fueled growth and a fair value of $440, while another could highlight rising risks, expecting only $225. This demonstrates how much your perspective can shape your investment call.

For Salesforce, we’ll make it really easy for you with previews of two leading Salesforce Narratives: 🐂 Salesforce Bull Case

• Fair value: $348.41
• Current price is 29.4% below fair value
• Revenue growth: 9.6%

• Salesforce’s new AI and data products (Data Cloud and Agentforce) are expected to drive future revenue growth and improve operational efficiency.
• The company is shifting to consumption-based pricing and leveraging cloud partnerships to potentially boost earnings and manage costs more effectively.
• Key risks include competition in the AI and digital labor market, uncertainty from new products, economic headwinds, and dependence on third-party infrastructure partners.

🐻 Salesforce Bear Case

• Fair value: $223.99
• Current price is 9.7% above fair value
• Revenue growth: 13%

• Salesforce has solidified its leadership with enterprise cloud customers, but future growth prospects may be overestimated by the market.
• Efficiency gains and capital returns, such as buybacks, are likely to continue; however, a concentrated revenue portfolio and market saturation add to volatility and risk.
• Adopting AI may provide near-term value, but long-term competitive pressures and margin challenges could limit significant returns unless Salesforce can build enduring advantages.

Do you think there's more to the story for Salesforce? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com