Salesforce Rallies As Investors Bet On Refocus And Margin Expansion

Salesforce CRM shares climbed Friday as renewed investor optimism signaled a potential turning point for the software giant, which has faced slowing growth, rising competition, and mounting pressure to refocus on its core cloud business.

DA Davidson analyst Gil Luria upgraded Salesforce CRM from Underperform to Neutral with a price forecast of $225 on Friday.

Luria upgraded Salesforce to Neutral from Underperform but kept his $225 price forecast, valuing the company at 18.5x his updated fiscal 2027 EPS estimate.

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Luria said Salesforce has trailed the iShares Expanded Tech-Software Sector ETF IGV by 48 points year-to-date and 27 points since its fiscal first-quarter 2026 earnings on May 28, as investor sentiment soured over slowing organic growth in its core business and intensifying competition across its customer base.

Luria projected Salesforce's organic revenue growth at 8% in fiscal 2026 and 7% in fiscal 2027 (excluding Informatica INFA), warning that the company's push into Agentforce is coming at the expense of its core cloud business.

He said Salesforce's fiscal second-quarter 2026 guidance, the first quarter in its history where cRPO growth is expected to be under 10% in constant currency, confirms mounting headwinds from market saturation, competitive pressure, and customer budget scrutiny.

He noted that while Agentforce adoption has been strong, bottlenecks such as tech debt, siloed data, unpredictable costs when AI is enabled, and unclear enterprise AI strategies limit the efficiency gains investors expect.

Luria said activist investor Starboard Value recently boosted its stake by 47%, which he sees as a signal of renewed pressure on Salesforce to refocus on core growth, expand margins, and avoid dilutive acquisitions.

Luria projected fiscal second-quarter 2026 revenue of $10.08 billion and EPS of $2.78.

Price Actions: CRM shares traded higher by 2.65% to $239.55 at last check Friday.

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