Wall Street analysts don't see Salesforce paying off soon after disappointing current-quarter guidance

Salesforce shares declined nearly 8% after the company issued Q3 revenue guidance of $10.24-$10.29 billion, which fell slightly short of the $10.29 billion consensus, despite exceeding Q2 revenue and EPS expectations. Despite this near-term outlook, Wall Street analysts largely maintain bullish ratings, with many citing the long-term growth potential from AI initiatives like Agentforce and Data Cloud, alongside the stock's current low valuation, as key drivers, even while acknowledging a mature CRM market and implementation challenges.

Analysis

Salesforce (CRM) stock experienced a significant decline of nearly 8% after issuing disappointing Q3 revenue guidance of $10.24-$10.29 billion, the high end of which merely meets the $10.29 billion LSEG consensus. This muted outlook overshadowed a Q2 earnings beat, where the company posted $2.91 in EPS on $10.24 billion in revenue, surpassing expectations. The market reaction underscores a core tension: a maturing core business, as evidenced by the un-raised 8% FY26 revenue growth forecast and analyst notes of weakening top-of-funnel demand, versus a long-term bull case centered on artificial intelligence. While the vast majority of analysts remain bullish, they acknowledge that the adoption of key AI products like Agentforce is slow and large-scale rollouts are currently rare. Positive counterpoints include an acceleration in paid AI deals (2,000 in Q2 versus 1,000 in Q1) and a raised FY26 Free Cash Flow (FCF) growth outlook to 12-13%. Bullish analysts from firms like JPMorgan and Morgan Stanley argue that at a valuation near historical lows (e.g., 16x EV/CY26 FCF), the market is overly discounting the long-term potential for AI to reaccelerate growth.

Key Decisions for Investors

• Given the stock's 8% decline and valuation near historical lows, investors with a long-term horizon may view this as an attractive entry point to capitalize on future AI monetization and strong free cash flow generation.
• Investors should closely monitor leading indicators for a growth inflection, such as the rate of new paid AI deals and management's commentary on the pipeline for large-scale Agentforce deployments, before committing significant new capital.
• A hold strategy could be prudent to balance the weak near-term revenue guidance against the stronger long-term FCF outlook, while remaining cognizant of downside risks including a mature core market and the potential for a large M&A transaction.