AI buble fears drive Salesforce stock to historic lows

AI was supposed to be Salesforce’s next growth engine, not its gravity. But as bubble fears spread and investors rethink which tech names are actually on the right side of AI development, Salesforce has been pushed toward valuation levels that would have seemed unthinkable a few years ago.

Shares are down nearly 30% year to date and near the bottom of their 52-week range, even as Wall Street continues to be told it expects a new era of double-digit growth. Salesforce’s revenue growth, which was close to 20% per year in good years, is now expected to remain below 10% for the next few years. And the company’s multiple has also fallen: the company’s forward P/E is now around 18, trading at around five times forward sales, a sharp decline and below where many large software industry competitors still operate.

The market is pricing Salesforce as a slightly above-market performer, not a company that spent over a year shouting about AI agents and its reaccelerated growth curve.

The company reports its latest results after the bell Wednesday, and the Street expects a modest pace: revenue of about $10.27 billion and non-GAAP earnings of about $2.86 per share, up about 9% and 18% year over year, respectively. But Salesforce’s bar isn’t so much about hitting numbers that everyone has already noted as it is about whether the company can change its story.

Investors are wondering whether Agentforce and Data Cloud – last disclosed at an ARR of $1.2 billion – can really start to matter. If Salesforce is content to maintain the status quo, the stock could rebound. If it provides proof that AI is finally making things happen – real attachment rates, widespread adoption, a hint of an AI-rich future – then perhaps this decommissioned cloud giant is starting to look like a mispriced AI sleeper instead of a disappearing technological relic.

The AI ​​dream versus the AI ​​discount

The disconnect between AI and the Salesforce story starts with the chart and ends with the chatter. On one side, a company is telling investors that it can generate more than $60 billion in annual revenue by the end of the decade, with AI, data and automation doing most of the heavy lifting. But on the other hand, there is a stock that is losing value and trading at the lowest valuation in its public life, because many people now hear “AI” and think “bubble” not “runway.”

Nvidia and the hyperscalers are still seen as the arms dealers and owners of the AI ​​boom. But more and more software names are being criticized based on the theory that AI will eat their lunch, their contracts, and perhaps their entire category. Salesforce has become the poster child of this second group. MarketWatch literally put it in its “AI loser” camp, while Barron’s warned that Salesforce’s profits are unlikely to “dispel fears that AI could harm it.” Even a strong quarter announced Wednesday likely won’t address the central concern surrounding Salesforce: that AI could compress software prices, redirect budgets to infrastructure or make it easier for new entrants to replace incumbents.

Part of the irony is that Salesforce actually did what shareholders said they wanted. The company created Agentforce, rebranded itself as “AI + Data + CRM,” started splitting AI and Data Cloud revenue, and started buying more data so those agents would have something to chew on. AI and data subscriptions are growing rapidly on a small base, the company is coughing up cash, and CEO Marc Benioff has spent the last year preaching a very strong, very confident gospel to make this AI story feel like destiny rather than an optional add-on. He said “agentic AI” was the next big wave after cloud and mobile, touting Agentforce 360 ​​as the operating system for the “agentic enterprise” and calling it “crazy talk” to suggest AI would harm Salesforce.

But Salesforce’s growth has slowed to high single digits, while the rest of the market pays premium multiples for anything with an AI halo. The AI ​​figure, while eye-popping in percentage terms, still represents only a fraction of the company’s total revenue, and early adoption statistics clearly show that most customers are still kicking the tires, not rebuilding their workflows around Salesforce-built agents. Every time management becomes more interested in the long-term AI story and “delayed returns,” the market seems to hear a familiar phrase from last cycle: trust us, it happens.

Bubble talk creeps in

Today’s macroeconomic developments mean that anxiety takes on more meaning. Central banks and analysts openly worry about an AI bubble, overbuilt data centers and excessive leverage to chase too many big ideas. Nvidia and hyperscalers are still considered the big winners of this development. A slower-growing mega-cap SaaS name that tries to reinvent itself on the fly finds itself in a more awkward role – not frothy enough to ride the euphoria, not dull enough to be a safe haven, and suddenly cheap enough that “all-time lows” start showing up in media coverage.

Instead of being judged on the future of AI, Salesforce is being judged on its AI risks.