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Salesforce Trades at a Discounted Valuation: Time to Buy the Stock?
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Key Takeaways
Salesforce trades at 13.41 forward P/E, far below the industry average of 26.77.
Salesforce shares are down 31.3% YTD amid broader enterprise software weakness.
Salesforce's Agentforce and Data Cloud hit $2.9B Q4 FY26 recurring revenues, up 200% YoY.
Salesforce, Inc. (CRM - Free Report) stock is trading at valuation levels that now look unusually low for a company with its market leadership and long-term growth potential. CRM stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 13.41, which is significantly lower than the Zacks Internet – Software industry average of 26.77.
Salesforce has a lower P/E multiple than major enterprise software makers, including Microsoft Corporation (MSFT - Free Report) , ServiceNow, Inc. (NOW - Free Report) and SAP SE (SAP - Free Report) . At present, Microsoft, ServiceNow and SAP trade at P/E multiples of 21.84, 20.50 and 19.67, respectively. This valuation gap suggests that investors have turned significantly cautious about Salesforce despite the company continuing to hold a strong competitive position.
Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The lower valuation is largely tied to the steep decline in Salesforce shares this year. CRM stock has fallen 31.3% year to date (YTD), making it one of the weakest-performing names in the software industry. However, the weakness is part of a much broader correction across enterprise software stocks rather than a sign of company-specific trouble.
Several large software players, including Microsoft, SAP and ServiceNow, have also experienced sizable declines this year. YTD, shares of Microsoft, SAP and ServiceNow have fallen 14.1%, 28.5% and 40.5%, respectively. Investors are becoming more selective as concerns rise over slowing enterprise spending, economic uncertainty and the long-term impact of artificial intelligence (AI) on traditional software business models.
Salesforce YTD Price Return Performance
Image Source: Zacks Investment Research
One of the biggest concerns is the rise of agentic AI systems that can independently perform complex workplace tasks. This has created fears that software companies relying heavily on user-based subscriptions could eventually face slower growth if businesses require fewer employees or software seats. 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 tensions and inflation concerns are creating a cautious spending environment for enterprises. Companies are prioritizing efficiency and delaying some large technology investments, which could pressure software demand in the near term.
Despite all these headwinds, writing off Salesforce entirely would be short-sighted. The stock’s decline reflects fear, but not necessarily a broken business.
AI and Platform Expansion Support CRM’s Long-Term 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 Reviving Sales Growth for Salesforce
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
Conclusion: Buy CRM Stock at Current Valuations
Salesforce is facing the same macroeconomic and AI-related concerns impacting the broader software sector, but the company’s core business remains strong. Its leadership in CRM, expanding AI portfolio and growing recurring revenue streams provide a solid foundation for long-term growth.
Given the sharp decline in the stock and its discounted valuation compared with peers, the market appears to be pricing in too much pessimism. For long-term investors, Salesforce stock looks attractive at current levels, making CRM an ideal investment option for now.
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Image: Bigstock
Salesforce Trades at a Discounted Valuation: Time to Buy the Stock?
Key Takeaways
Salesforce, Inc. (CRM - Free Report) stock is trading at valuation levels that now look unusually low for a company with its market leadership and long-term growth potential. CRM stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of 13.41, which is significantly lower than the Zacks Internet – Software industry average of 26.77.
Salesforce has a lower P/E multiple than major enterprise software makers, including Microsoft Corporation (MSFT - Free Report) , ServiceNow, Inc. (NOW - Free Report) and SAP SE (SAP - Free Report) . At present, Microsoft, ServiceNow and SAP trade at P/E multiples of 21.84, 20.50 and 19.67, respectively. This valuation gap suggests that investors have turned significantly cautious about Salesforce despite the company continuing to hold a strong competitive position.
Salesforce Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The lower valuation is largely tied to the steep decline in Salesforce shares this year. CRM stock has fallen 31.3% year to date (YTD), making it one of the weakest-performing names in the software industry. However, the weakness is part of a much broader correction across enterprise software stocks rather than a sign of company-specific trouble.
Several large software players, including Microsoft, SAP and ServiceNow, have also experienced sizable declines this year. YTD, shares of Microsoft, SAP and ServiceNow have fallen 14.1%, 28.5% and 40.5%, respectively. Investors are becoming more selective as concerns rise over slowing enterprise spending, economic uncertainty and the long-term impact of artificial intelligence (AI) on traditional software business models.
Salesforce YTD Price Return Performance
Image Source: Zacks Investment Research
One of the biggest concerns is the rise of agentic AI systems that can independently perform complex workplace tasks. This has created fears that software companies relying heavily on user-based subscriptions could eventually face slower growth if businesses require fewer employees or software seats. 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 tensions and inflation concerns are creating a cautious spending environment for enterprises. Companies are prioritizing efficiency and delaying some large technology investments, which could pressure software demand in the near term.
Despite all these headwinds, writing off Salesforce entirely would be short-sighted. The stock’s decline reflects fear, but not necessarily a broken business.
AI and Platform Expansion Support CRM’s Long-Term 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 Reviving Sales Growth for Salesforce
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
Conclusion: Buy CRM Stock at Current Valuations
Salesforce is facing the same macroeconomic and AI-related concerns impacting the broader software sector, but the company’s core business remains strong. Its leadership in CRM, expanding AI portfolio and growing recurring revenue streams provide a solid foundation for long-term growth.
Given the sharp decline in the stock and its discounted valuation compared with peers, the market appears to be pricing in too much pessimism. For long-term investors, Salesforce stock looks attractive at current levels, making CRM an ideal investment option for now.
Salesforce carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.