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Salesforce Plunges 35% YTD: Should You Buy, Sell or Hold the Stock?
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Key Takeaways
CRM shares are down 35.5% YTD, underperforming a broader software industry sell-off.
CRM is boosting AI-driven growth, with Agentforce and Data Cloud generating strong recurring revenue gains.
Salesforce trades at a forward P/E of 12.76, well below peers, as revenue growth shows signs of stabilizing.
Salesforce, Inc. (CRM - Free Report) shares have dropped a steep 35.5% year to date (YTD), making it one of the weakest performers in the broader software space. This decline stands out even more when compared with the overall Zacks Internet – Software industry, which is down 16.1%. Importantly, this is not a Salesforce-only issue.
Major peers like Microsoft Corporation (MSFT - Free Report) , Oracle Corporation (ORCL - Free Report) and SAP SE (SAP - Free Report) have also seen notable corrections. YTD, shares of Microsoft, Oracle and SAP have fallen 22.7%, 29.1% and 32.2%, respectively. This broader sell-off signals a sector-wide reset rather than a company-specific collapse. Investors are reassessing how traditional software companies will perform in a fast-changing environment dominated by artificial intelligence (AI) and macro uncertainty.
Salesforce YTD Price Return Performance
Image Source: Zacks Investment Research
The biggest concern weighing on sentiment is the disruptive potential of AI. Specifically, the rise of “agentic AI” — autonomous systems capable of performing complex business tasks — has sparked fears that the traditional software-as-a-service (SaaS) model may lose relevance. If fewer human users are needed, companies may cut back on subscription seats (or per-seat pricing), which have long been the backbone of software revenue models.
Geopolitical instability, especially the ongoing conflict in the Middle East, is adding another layer of uncertainty. Rising energy prices and inflation concerns are making investors cautious.
Salesforce’s outlook is exposed to ongoing macroeconomic uncertainty and geopolitical tensions that can affect enterprise IT spending. In uncertain economic environments, businesses often delay large IT spending, which can slow new deal activity and expansion revenues. Since Salesforce’s revenues come from enterprise customers, any slowdown in corporate budgets could directly impact growth.
Despite all these headwinds, writing off Salesforce entirely would be short-sighted. The stock’s decline reflects fear, but not necessarily a broken business.
Enterprise Software: A Key Catalyst for CRM’s Growth
Salesforce remains the global leader in customer relationship management, a position it has consistently held, according to Gartner. However, the company is no longer just a CRM provider. Rather, it is evolving into a full-scale enterprise platform.
Salesforce is building a broader enterprise ecosystem centered on AI, data and collaboration. Acquisitions like Slack and Informatica highlight this ambition, while smaller AI-focused deals such as Doti AI and Spindle AI show management’s urgency in staying ahead of the curve.
AI is now central to Salesforce’s growth story. Since the 2023 rollout of Einstein GPT, Salesforce has been embedding generative AI across its offerings to help companies automate processes, improve decision-making and strengthen customer relationships.
Its latest innovation, Agentforce, is gaining momentum. Combined with Data Cloud, these AI-driven offerings brought in $2.9 billion in recurring revenues in the fourth quarter of fiscal 2026, representing more than 200% year-over-year increase. Agentforce alone generated $800 million in recurring revenues, up 169% year over year. More than 60% of Agentforce deals came from existing clients, showing Salesforce’s success in cross-selling AI features to its user base.
This shows Salesforce is successfully monetizing its installed base, a key strength that many competitors struggle to replicate. Instead of chasing new clients aggressively, it is deepening relationships with current ones, which is often more profitable and sustainable.
One of the biggest concerns around Salesforce in recent quarters has been slowing growth. After years of strong double-digit expansion, revenue growth had slipped into the high single digits, raising questions about maturity and saturation.
However, the latest results suggest a turnaround may already be underway. In the fourth quarter of fiscal 2026, revenues grew 12% year over year, a meaningful improvement that indicates demand is stabilizing.
Management is cautiously optimistic. It expects 12-13% growth in the first quarter and 10-11% for fiscal 2027. While these numbers are not explosive, they are healthy for a company of Salesforce’s size and signal that growth is not stalling. Analyst estimates are also pointing to similar low-double-digit growth for the first quarter and fiscal 2027.
Image Source: Zacks Investment Research
Salesforce’s Valuation Remains Reasonable
After the sharp correction, Salesforce’s valuation looks far more appealing. The stock currently trades at a forward 12-month price-to-earnings (P/E) of 12.76, which is significantly below the industry average of 26.31.
Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
This discount becomes even more striking when compared to peers, including Microsoft, SAP and Oracle. At present, Microsoft, SAP and Oracle trade at P/E multiples of 20.30, 18.90 and 17.50, respectively.
Conclusion: Hold Salesforce Stock for Now
Salesforce is clearly facing a challenging environment. AI disruption fears, macro uncertainty and geopolitical tensions are all real risks that cannot be ignored.
However, the company’s fundamentals remain intact. Its leadership in customer relationship management solutions, growing AI-driven offerings, improving revenue momentum and attractive valuation provide reasons to hold the stock for long-term gains.
View the Zacks #1 Rank List
Image: Bigstock
Salesforce Plunges 35% YTD: Should You Buy, Sell or Hold the Stock?
Key Takeaways
Salesforce, Inc. (CRM - Free Report) shares have dropped a steep 35.5% year to date (YTD), making it one of the weakest performers in the broader software space. This decline stands out even more when compared with the overall Zacks Internet – Software industry, which is down 16.1%. Importantly, this is not a Salesforce-only issue.
Major peers like Microsoft Corporation (MSFT - Free Report) , Oracle Corporation (ORCL - Free Report) and SAP SE (SAP - Free Report) have also seen notable corrections. YTD, shares of Microsoft, Oracle and SAP have fallen 22.7%, 29.1% and 32.2%, respectively. This broader sell-off signals a sector-wide reset rather than a company-specific collapse. Investors are reassessing how traditional software companies will perform in a fast-changing environment dominated by artificial intelligence (AI) and macro uncertainty.
Salesforce YTD Price Return Performance
Image Source: Zacks Investment Research
The biggest concern weighing on sentiment is the disruptive potential of AI. Specifically, the rise of “agentic AI” — autonomous systems capable of performing complex business tasks — has sparked fears that the traditional software-as-a-service (SaaS) model may lose relevance. If fewer human users are needed, companies may cut back on subscription seats (or per-seat pricing), which have long been the backbone of software revenue models.
Geopolitical instability, especially the ongoing conflict in the Middle East, is adding another layer of uncertainty. Rising energy prices and inflation concerns are making investors cautious.
Salesforce’s outlook is exposed to ongoing macroeconomic uncertainty and geopolitical tensions that can affect enterprise IT spending. In uncertain economic environments, businesses often delay large IT spending, which can slow new deal activity and expansion revenues. Since Salesforce’s revenues come from enterprise customers, any slowdown in corporate budgets could directly impact growth.
Despite all these headwinds, writing off Salesforce entirely would be short-sighted. The stock’s decline reflects fear, but not necessarily a broken business.
Enterprise Software: A Key Catalyst for CRM’s Growth
Salesforce remains the global leader in customer relationship management, a position it has consistently held, according to Gartner. However, the company is no longer just a CRM provider. Rather, it is evolving into a full-scale enterprise platform.
Salesforce is building a broader enterprise ecosystem centered on AI, data and collaboration. Acquisitions like Slack and Informatica highlight this ambition, while smaller AI-focused deals such as Doti AI and Spindle AI show management’s urgency in staying ahead of the curve.
AI is now central to Salesforce’s growth story. Since the 2023 rollout of Einstein GPT, Salesforce has been embedding generative AI across its offerings to help companies automate processes, improve decision-making and strengthen customer relationships.
Its latest innovation, Agentforce, is gaining momentum. Combined with Data Cloud, these AI-driven offerings brought in $2.9 billion in recurring revenues in the fourth quarter of fiscal 2026, representing more than 200% year-over-year increase. Agentforce alone generated $800 million in recurring revenues, up 169% year over year. More than 60% of Agentforce deals came from existing clients, showing Salesforce’s success in cross-selling AI features to its user base.
This shows Salesforce is successfully monetizing its installed base, a key strength that many competitors struggle to replicate. Instead of chasing new clients aggressively, it is deepening relationships with current ones, which is often more profitable and sustainable.
Latest Results Indicate Salesforce’s Reviving Sales Growth
One of the biggest concerns around Salesforce in recent quarters has been slowing growth. After years of strong double-digit expansion, revenue growth had slipped into the high single digits, raising questions about maturity and saturation.
However, the latest results suggest a turnaround may already be underway. In the fourth quarter of fiscal 2026, revenues grew 12% year over year, a meaningful improvement that indicates demand is stabilizing.
Management is cautiously optimistic. It expects 12-13% growth in the first quarter and 10-11% for fiscal 2027. While these numbers are not explosive, they are healthy for a company of Salesforce’s size and signal that growth is not stalling. Analyst estimates are also pointing to similar low-double-digit growth for the first quarter and fiscal 2027.
Image Source: Zacks Investment Research
Salesforce’s Valuation Remains Reasonable
After the sharp correction, Salesforce’s valuation looks far more appealing. The stock currently trades at a forward 12-month price-to-earnings (P/E) of 12.76, which is significantly below the industry average of 26.31.
Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
This discount becomes even more striking when compared to peers, including Microsoft, SAP and Oracle. At present, Microsoft, SAP and Oracle trade at P/E multiples of 20.30, 18.90 and 17.50, respectively.
Conclusion: Hold Salesforce Stock for Now
Salesforce is clearly facing a challenging environment. AI disruption fears, macro uncertainty and geopolitical tensions are all real risks that cannot be ignored.
However, the company’s fundamentals remain intact. Its leadership in customer relationship management solutions, growing AI-driven offerings, improving revenue momentum and attractive valuation provide reasons to hold the stock for long-term gains.
Salesforce carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.