Salesforce earnings surprise, but the bears on the stock still lurk: What Wall Street is saying

Yahoo

7 days ago

Salesforce (CRM) did something late Wednesday that most of Corporate America hasn't done this earnings season: Raise its full-year sales and profit guidance despite numerous economic headwinds.
"Everything went well for us this quarter. We had bookings go well, revenue went well, and currency went well," Salesforce co-founder and CEO Marc Benioff told Yahoo Finance (video above). "We're just seeing some incredible results from customers."
Shares in the software giant edged into the green in pre-market trading on Thursday.
The company said its data cloud and AI businesses are hauling in annual recurring revenue of more than $1 billion, up 120% year over year. It added that it has closed over 8,000 deals for its new Agentforce technology, of which half are paid.
"Overall, we are pleased to see Salesforce deliver 10-11% organic constant currency current remaining performing obligation growth, per our calculations, while we do not see any meaningful deviations relative to our model in the results," JP Morgan analyst Mark Murphy said in a note.
Here's what Wall Street more broadly is saying about Salesforce's quarter. (To track post-earnings trends on the Street for Salesforce, such as sales and earnings revisions, head to the 'analysis' section on Yahoo Finance.)
Rating: Neutral (reiteration)
Price Target: None (reiteration)
"Management talked about accelerating 'growth' so much on the call that it felt like we were in the middle of a game of 'Where's Waldo?' since improving growth was left to metrics that may or may not drive the important subscription growth, and subscription growth continues to decelerate. For instance, the Platform business (where Agentforce and Data Cloud reside) did accelerate (+14% from +12% in the prior period), but growth for the Clouds that make up Salesforce's core business all declined materially: Sales (+7% from +9%), Service (+7% from +9%), and Marketing (+4% from +8%). This yielded moderating overall constant currency subscription growth of 8.7% from 9.1% in the prior quarter and 12.8% in the year-ago period."
Rating: Overweight (reiteration)
Price Target: $440 (reiteration)
"Most of the headline metrics were either fine or even a slight disappointment relative to our forecasts, particularly in the core, but there was a single exception in current remaining performance obligation (cRPO). cRPO's constant currency growth was 11%, ahead of estimates of 10%, driving current bookings growth of 16.3%, more than double our estimate. For us, coupling the better current bookings with the positive commentary on growth is enough to keep us optimistic on shares, especially at this price."
Rating: Underperform (reiteration)
Price Target: $225 (raised from $200)
"AI's 2% does great, the other 98% decelerates. Salesforce reported better than feared results, but the FY2026 outlook adjusting for foreign exchange and the first quarter beat was lowered vs. the initial guide as growth in the core cloud segments continues to decelerate, partially offset by data cloud and AI tailwinds. cRPO growth was 1 point better than expected, however, the second quarter guide came in slightly lighter than expected with the outlook implying single digit constant currency growth which would be the first time in company history."
Rating: Buy (reiteration)
Price Target: $375 (reiteration)
"The central questions on Salesforce remain 1) When will Agentforce/Data Cloud represent a material component of the revenue composition ($1 billion annual recurring revenue vs. $39.3 billion annualized first quarter revenue), and 2) Can core Clouds continue to grow at current rates or potentially accelerate ex-AI. We believe the company's commentary around small business/mid-market traction, multi-cloud, and industry cloud support the idea that there's still ample runway for this business ex-AI, and believe that the incremental interest the company is driving through its AI solutions can sustain high-single digit growth in the mid-term."
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram and on LinkedIn. Tips on stories? Email [e-mail].