Salesforce (CRM) heads into its fiscal first-quarter earnings report Wednesday afternoon facing one of the most important moments in the company’s recent history. The stock has become ground zero for Wall Street’s growing debate over whether artificial intelligence will supercharge enterprise software companies or structurally disrupt the entire SaaS business model. Shares of Salesforce have plunged roughly 32% year-to-date and remain down nearly 50% from their all-time highs as investors question whether AI agents could eventually replace traditional customer relationship management software. Yet despite the selloff, many analysts argue the market may now be dramatically undervaluing a company that still generates over $41 billion in annual revenue, nearly $15 billion in free cash flow, and remains deeply embedded across the enterprise software ecosystem.
The pressure on Salesforce has become particularly notable because the broader software group has started to stabilize in recent months. While software stocks were hammered earlier this year amid fears of an “AI vs SaaS” war, names tied to cybersecurity and AI infrastructure have recently rebounded sharply. Salesforce, however, has largely failed to participate in that recovery, highlighting continued investor skepticism around its growth trajectory and AI monetization strategy. Analysts at Bank of America recently reinstated coverage with an underperform rating and a $160 price target, warning that Salesforce could face a “structural reset” as artificial intelligence pressures customer additions, upsell opportunities, and long-term monetization pathways.
The core concern is straightforward. Salesforce built its empire around highly profitable seat-based enterprise software subscriptions, with gross margins approaching 78%. The fear is that AI agents and increasingly sophisticated coding tools could allow enterprises to build custom CRM solutions internally, bypassing traditional SaaS vendors altogether. Palantir Technologies (PLTR) added fuel to that narrative earlier this month when management disclosed it had replaced its own CRM stack with an internally developed solution. Investors now worry that AI could compress pricing power across the entire software industry, particularly for mature enterprise platforms like Salesforce.
Salesforce management, however, argues the opposite is happening. Rather than being disrupted by AI, CEO Marc Benioff believes Salesforce is becoming one of the primary platforms enterprises will use to deploy AI agents at scale. The company’s Agentforce product suite has become the centerpiece of that strategy. At the end of fiscal 2026, Agentforce annual recurring revenue reached roughly $800 million, up 169% year-over-year, while combined Agentforce and Data 360 ARR surpassed $2.9 billion, growing more than 200% annually. Benioff recently highlighted that Salesforce closed approximately 29,000 Agentforce deals within the first 15 months of launch, with customers in production increasing nearly 50% during the fourth quarter alone.
Wall Street will now be watching closely to determine whether those AI initiatives are large enough to offset slowing growth in Salesforce’s legacy business. Analysts expect Salesforce to report fiscal first-quarter earnings of approximately $3.13 per share on revenue of roughly $11.06 billion to $11.1 billion, representing about 12% year-over-year revenue growth and more than 21% EPS growth. The company previously guided for first-quarter revenue between $11.03 billion and $11.08 billion alongside current remaining performance obligation, or cRPO, growth of approximately 14%.
That cRPO number may ultimately become one of the single most important metrics in the report. Investors increasingly view cRPO as one of the clearest indicators of future revenue acceleration because it measures contracted backlog expected to convert into revenue over the next 12 months. Salesforce exited fiscal 2026 with cRPO of $35.1 billion, up 16% year-over-year, which notably outpaced overall revenue growth. Analysts at Cantor Fitzgerald, Piper Sandler, Deutsche Bank, and Stifel all emphasized ahead of earnings that investors are looking for evidence Salesforce can reaccelerate growth during the second half of fiscal 2027. Strong cRPO performance, improving net new annual order value trends, and accelerating Agentforce adoption could help support that narrative.
Guidance will likely matter even more than the quarterly numbers themselves. Salesforce previously forecast full-year fiscal 2027 revenue between $45.8 billion and $46.2 billion alongside adjusted EPS guidance of $13.11 to $13.19. Management also reiterated a long-term fiscal 2030 revenue target of $63 billion during its last earnings call. Investors will want to hear whether management still feels confident in achieving second-half acceleration despite continued macro uncertainty and growing AI disruption fears across enterprise software.
Another key issue is valuation. Bulls argue Salesforce has become one of the cheapest large-cap software names in the market despite maintaining strong profitability and cash generation. The stock currently trades at roughly 13 times forward earnings and approximately 9-10 times forward free cash flow, well below historical averages and at a substantial discount to many peers. Salesforce generated $14.4 billion in free cash flow during fiscal 2026 and recently authorized a massive $50 billion share repurchase program, including a new $25 billion accelerated repurchase initiative. Several analysts believe the market is now treating Salesforce more like a mature utility-like cash flow business rather than a software growth company.
Still, sentiment remains fragile. Analysts at Piper Sandler noted that concerns around AI disruption, product line weakness in areas like Tableau and Commerce, and Salesforce’s evolving pricing model could continue weighing on the stock in the near term. Meanwhile, Deutsche Bank warned that the quarter may lack the kind of upside surprise necessary to dramatically improve investor sentiment. Options markets are currently implying an approximately 8% move in either direction following earnings, reflecting elevated uncertainty surrounding the report.
For Salesforce to truly excite investors tonight, the company likely needs more than just a modest earnings beat. Bulls will want to see cRPO growth comfortably above expectations, continued acceleration in Agentforce ARR, healthy commentary around enterprise demand trends, and evidence that AI monetization is becoming meaningful rather than merely theoretical. Investors will also likely focus heavily on whether management can convincingly argue that Salesforce is becoming an AI infrastructure layer for enterprises rather than a legacy SaaS company vulnerable to disruption.
After a brutal re-rating over the past year, Salesforce enters this report with expectations deeply divided. The stock no longer trades like a dominant software platform. Instead, Wall Street is asking whether Salesforce can prove it still deserves to be viewed as one of enterprise software’s long-term winners in the AI era. Tonight’s results could go a long way toward shaping that answer.