What Wall Street analysts are saying after latest Salesforce earnings

Salesforce reported better-than-expected Q1 earnings and revenue, raised its full-year outlook, and reaffirmed its 9% subscription revenue growth forecast; however, the stock saw little movement as analysts expressed mixed sentiments. RBC downgraded Salesforce due to concerns about the Informatica acquisition and potential long-term AI disruption, while Goldman Sachs reiterated a buy rating, citing confidence in Salesforce's strategic focus on data and AI opportunities, and Morgan Stanley also remains overweight, noting positive risk/reward given the current valuation.

Analysis

Salesforce reported fiscal first-quarter earnings and revenue that surpassed consensus estimates, subsequently raising its full-year earnings and revenue outlook and reiterating its 9% growth forecast for subscription and support revenue. Despite these positive results, the stock exhibited minimal movement in premarket trading, reflecting a divided analyst sentiment. RBC downgraded the shares to 'sector perform,' citing concerns over the $8 billion acquisition of Informatica and potential long-term disruption from AI-native competitors, reducing its price target to $275. Conversely, Goldman Sachs reiterated a 'buy' rating and increased its target to $385, expressing confidence in Salesforce's strategic pivot towards data and AI opportunities, evidenced by a 14% increase in Account Executives and an evolved sales compensation strategy tied to both new and renewal performance. Morgan Stanley also maintained an 'overweight' rating, raising its target to $404, highlighting solid 11% constant currency current Remaining Performance Obligation (cRPO) growth and momentum in Data Cloud and Agentforce, viewing the stock's valuation at 17 times CY26 free cash flow as offering a positive risk/reward. Bank of America sustained its 'buy' rating with a $350 target, noting a stable demand environment and continued strength in the Agentforce new product cycle, with Q1 cRPO growth exceeding expectations. However, firms like Citi (Neutral, $320 target) and Wells Fargo (Equal Weight, $275 target) anticipate the shares may trade sideways due to questions around organic growth, the Informatica deal's impact, and an uneven macroeconomic backdrop. Bernstein reiterated an 'underperform' rating ($255 target), acknowledging a stable quarter but remaining concerned about Salesforce's maturity and potentially inflated expectations for Agentforce.

Key Decisions for Investors

• Investors should carefully weigh Salesforce's consistent execution and strong initial traction in AI-driven products like Data Cloud and Agentforce against the significant strategic risks posed by the Informatica acquisition and the evolving long-term competitive landscape shaped by AI natives.
• Consider the divergence in analyst price targets, with bulls highlighting a potentially attractive valuation (e.g., Morgan Stanley's 17x CY26 FCF) and growth catalysts, while bears point to decelerating organic growth and M&A integration challenges.
• Monitor key metrics such as cRPO growth, adoption rates of new AI offerings, progress on the Informatica integration post-closure, and any shifts in the company's margin expansion and expense control narrative following recent strategic investments.