SalesForce can surprise to the upside, with such a low valuation, a growing RPO and strength in Agentic AI.
SalesForce (CRM) $262
I had posted on 7/14/2025 when the price was roughly the same at $260 that it was OK to accumulate targeting a return of 10% a year. The chief concerns at that time were that it was a legacy software and that it would be difficult to grow sales beyond 8-9%, but that its margins were solid and the $243Bn behemoth was well entrenched with $42Bn in sales.
What has changed since then?
There hasn't been much movement on the price, but quarterly results showed a resilient company.
Wall Street has come around. This is from Mizuho featured in Seeking Alpha
Salesforce is “systematically addressing” all the issues that prevented broader Agentforce adoption, Mizuho analyst Gregg Moskowitz said. “In addition, we believe CRM’s core position as the system of record for front-office sales, marketing, and customer support provides a foundation to further centralize data via Data 360,” Moskowitz wrote in the note. “We reiterate that CY26 should be a much better year for CRM than CY25, and with legitimate potential for organic re-acceleration.” He has an Outperform rating and $360 price target on Salesforce.
For Salesforce, the company is seen as a name that “checks the most boxes” of a washed-out software company, though there is momentum related to its AI strategy and the possibility of revenue re-accelerating. Additionally, Salesforce's low free cash flow multiple skews its risk-reward “materially higher,” the analysts added.
CRM trades at a forward earnings multiple of 19x, with 14% earnings growth for a PEG of just 1.32. That’s very reasonable and if there is a re-rating of SaaS stocks, CRM could get more than the 10% a year we’re targeting.
This is the full post from July 2025.
Salesforce (CRM) $260.11
Industry/Sector/Type - - - Enterprise Software/SaaS, Customer Relationship Management/GARP
Possible catalyst for the stock - Agentic AI.
Salesforce (CRM) used to be a big growth stock, growing six-fold, both organically and through acquisitions till two years back.
But like with all technology SaaS companies, which reach a certain size, revenue growth has slowed down to 8 to 10% and 12 to 14% earnings to 12-14%, which is pretty fair for a $ 41 billion company with a market cap of $246 Bn. With that, even the multiples have come down to a reasonable 20 times earnings and just six times sales.
Focus on profits - It is tremendously profitable with 18% operating margins and a cash gusher with 30% cash flow margins, buying back shares for the last three years and also starting a dividend in 2024 - exhibiting all the hallmarks of a mature company.
How is salesforce trying to grow again?
They adopted agentic AI across the board, enhancing their own product offerings to renew growth.
A broad product portfolio that supports vendor consolidation trends, in SaaS, Cybersecurity, data, and other enterprise software companies. Salesforce for CRM, Slack for enterprise messaging, Tableau, marketing automation and API designs via MuleSoft are solid performers..
Their sheer size and entrenched reach in big organizations is a huge competitive advantage, where switching costs make it very difficult for large companies to change vendors, there’s a fair amount of price insulation for them.
But, while its Agentforce product has hit >$100 million in ARR, and is driving accelerating growth in the company's overall data cloud, it hasn’t moved the needle for a $41Bn company.
Is it worth buying as a GARP? The focus on profits and efficiency make earnings growth solid and sustainable. One can accumulate it as a steady GARP it but don’t expect more than 10-12% a year for it, the stock has been sideways for the past year, even as the market boomed.
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Nebius is executing brilliantly as an integrated neocloud player with tremendous reach, value addition and strong pricing power.
