Goldman Sachs lifts Salesforce stock target to $385, maintains buy

Goldman Sachs reiterated a "Buy" rating on Salesforce (CRM), raising the price target to $385 from $340, citing strong Q1 fiscal year 2026 results, upward revenue guidance, and strategic expansion into the Data and AI market. Salesforce reported $9.83B in revenue, surpassing estimates, and announced an $8B acquisition of Informatica to bolster data capabilities. Despite near-term cRPO renewal pressures, Goldman Sachs anticipates sustainable growth, a 35%+ operating margin, and $17-$18 free cash flow per share in fiscal year 2027, supported by growth in SMB, Data Cloud, and AI segments.

Analysis

Goldman Sachs has reaffirmed its "Buy" rating on Salesforce.com (NYSE:CRM), increasing the price target to $385 from $340, following the company's robust fiscal first-quarter 2026 financial results and an upward revision of its revenue guidance. Salesforce reported Q1 revenue of $9.83 billion, an 8% year-over-year increase that surpassed analyst expectations, and a non-GAAP earnings per share of $2.58. The company's strategic initiatives include a significant focus on the Data and Artificial Intelligence (AI) market, highlighted by its Data Cloud and AI segments exceeding $1 billion in scale with 120% year-over-year growth, and the announced $8 billion acquisition of Informatica, which is anticipated to be accretive within two years post-closing. Salesforce also raised its fiscal year 2026 revenue guidance to $41.3 billion and demonstrated strong financial health with gross profit margins at 77.19%, $37.9 billion in revenue over the last twelve months, and remaining performance obligations totaling $60.9 billion, a 13% year-over-year increase. Despite expectations of near-term pressure on current remaining performance obligations (cRPO) renewals, Goldman Sachs projects robust growth in the second half of fiscal year 2026, sustainable long-term growth, an operating margin exceeding 35%, and free cash flow per share of $17 to $18 in fiscal year 2027. This positive outlook is further supported by strong growth in the small and medium-sized business (SMB) segment and an expansion of Salesforce’s distribution capacity, including a planned 22% rise in account executives by year-end.

Key Decisions for Investors

• Investors should consider the strong analyst sentiment, exemplified by Goldman Sachs' increased price target and "Buy" rating, alongside Salesforce's consistent earnings beats and upward revenue revisions as positive indicators for the stock.
• It is advisable to closely monitor the execution and integration of the Informatica acquisition, particularly its impact on Salesforce's data capabilities and the timeline for achieving accretion, as well as the continued high-growth performance of the Data Cloud and AI segments.
• Investors should assess Salesforce's ability to navigate near-term cRPO renewal pressures while achieving its projected H2 FY26 growth acceleration and long-term operating margin targets of over 35%, considering the significant investments in sales team expansion and AI development.