Salesforce CEO says in interview SaaS not dead as AI creates opportunities

Salesforce stock is down 30% year-to-date as AI disruption concerns weigh on SaaS valuations, while the broader software ETF IGV has fallen 20%. The company is responding by embedding models from OpenAI and Anthropic into products like Agentforce and developing Agent Albert, but the shift toward AI-driven consumption pricing could pressure seat-based licenses and complicate its value proposition. Management is also pursuing a hybrid model that charges both seat licenses and per AI action, signaling a strategic pivot rather than an immediate fundamental turnaround.

Analysis

The market is treating CRM like a secular loser, but the more important issue is that AI does not just pressure its multiple — it attacks the denominator of the model. If customers can automate workflows with fewer human users, then seat growth slows while value capture migrates toward usage-based AI actions, which usually expands TAM but compresses near-term visibility and recurring revenue quality. That makes CRM a classic transition-risk name: the business may still grow, but investors will likely demand a lower multiple until AI monetization proves it can offset seat erosion.

Second-order, the competitive risk is not only from hyperscalers or model vendors, but from customers building adjacent workflow layers on top of open AI tooling and reducing reliance on packaged SaaS. That dynamic favors platforms with embedded distribution and proprietary data gravity, while punishing software vendors whose pricing is tied to headcount. In the near term, the hybrid seat-plus-action model can stabilize revenue, but it also introduces a harder-to-underwrite mix shift: AI actions may be accretive to revenue per customer while simultaneously reducing total seats, creating headline growth that masks slower underlying expansion.

The setup is more interesting over 6-18 months than over days. Near-term upside likely requires evidence that AI monetization is expanding wallet share faster than seat compression, or that enterprise buyers are unwilling to re-platform despite lower marginal costs. Absent that, any rally is vulnerable to being sold as a multiple-compression story rather than an earnings story, especially if peers continue to guide conservatively on net-new demand.

The contrarian angle is that the market may be over-penalizing CRM for a transition that could actually widen moat if Salesforce becomes the toll collector on AI-driven workflows. If it can own orchestration, identity, and workflow governance, usage pricing could re-rate the franchise closer to infrastructure software than legacy SaaS. But that outcome needs tangible adoption data; until then, the burden of proof stays high and the stock likely trades as a defensive short in software.

Key Decisions for Investors

• Maintain/establish a short CRM position on strength over the next 1-3 months; thesis is multiple compression persists until AI monetization offsets seat risk. Risk/reward improves if the stock rallies on product announcements without hard booking evidence.
• Pair trade: long infrastructure AI beneficiaries (e.g., MSFT or NOW on pullbacks) vs short CRM for a 3-6 month horizon; the trade expresses the shift from application-layer monetization risk to platform/control-point winners.
• Use CRM downside structures for event risk: buy 3-6 month put spreads instead of outright puts to capture potential post-earnings or guidance disappointment while limiting theta bleed.
• For longs, wait for proof points on Agentforce/usage adoption before bottom-fishing CRM; require at least one quarter of stable seat trends plus accelerating AI attach rates before considering a tactical long.
• If CRM breaks meaningfully below recent support after guidance, add to the short as the market may re-rate it from 'AI transformation' to 'legacy software under pressure' faster than fundamentals can reaccelerate.