TLDR
- Salesforce stock fell nearly 5% after disappointing Q4 revenue and 2025 guidance
- Company’s AI platform Agentforce will have only “modest” revenue contribution in 2025, with more “meaningful” impact expected in 2026
- Salesforce has closed 5,000 Agentforce deals since October, with over 3,000 being paid deals
- Annual recurring revenue from data cloud and AI more than doubled year over year
- Wall Street analysts maintain mostly positive outlooks despite near-term concerns
Salesforce (CRM) shares tumbled nearly 5% in Thursday trading after the software giant issued disappointing earnings guidance and downplayed expectations for its artificial intelligence platform. The stock dropped to $294.68, representing a decline of $12.65 or 4.11%.
The company reported fourth-quarter earnings that beat analyst expectations at $2.78 per share versus the $2.61 forecast. However, revenue fell short of estimates at $9.99 billion compared to the $10.04 billion expected.
Investor concern primarily centered around the company’s forecast for its AI agent platform, Agentforce. Salesforce executives told analysts on the earnings call that Agentforce would make only a “modest” contribution to revenue this year.
The company is now projecting a more “meaningful” revenue impact from the AI platform in fiscal 2026. This revelation disappointed investors who had been optimistic about the near-term financial benefits of the technology.
Salesforce CEO Marc Benioff attempted to reassure investors, noting that the guidance for Agentforce is “prudent” given the company’s recurring revenue model and the early stage of the product. “We’ll have a great year,” Benioff stated during a post-earnings interview.
Despite the tempered expectations, the company has made progress with Agentforce adoption. Salesforce reported closing 5,000 Agentforce deals since October, with more than 3,000 of those being paid arrangements.
The company also disclosed that Agentforce has been involved in 380,000 conversations through Salesforce’s help website. Human intervention was only required in 2% of these cases, suggesting strong autonomous performance.
Annual recurring revenue from data cloud and AI more than doubled year over year, indicating growing momentum in these segments despite the cautious outlook. This growth represents a bright spot amid the overall conservative guidance.
For the fiscal first quarter, Salesforce projects adjusted earnings per share of $2.53 to $2.55, with revenue between $9.71 billion and $9.76 billion. These figures fall below analyst expectations of $2.61 per share and $9.9 billion in revenue.
Looking further ahead, the company’s full-year fiscal 2026 forecast calls for adjusted earnings per share of $11.09 to $11.17 on revenue of $40.5 billion to $40.9 billion. This implies growth of 7.4%, which is lower than the market had anticipated.
Wall Street analysts have offered mixed reactions
Wall Street analysts have offered mixed but generally supportive reactions to the results. Stifel analyst J. Parker Lane maintained a Buy rating with a $375 price target, describing the after-hours pressure on shares as “an overreaction.”
D.A. Davidson analyst Gil Luria took a more cautious approach, maintaining a Neutral rating while lowering the price target from $307 to $275. Luria noted that “Sales can’t force Agentforce adoption” despite the company’s efforts.
Jefferies analyst Brent Thill remained bullish, reiterating a Buy rating with a $425 price target. Thill expressed continued belief that Salesforce can deliver double-digit percentage top-line growth while driving margins higher over time.
Evercore ISI and JPMorgan analysts also maintained optimistic outlooks, with price targets of $420 and $380 respectively. Both highlighted the company’s strong business model and potential for margin expansion despite near-term growth challenges.
Prior to the earnings release, Salesforce stock had gained 16% over the previous six months, fueled by optimism around Agentforce. The recent pullback reflects a recalibration of expectations regarding the timeline for AI-driven revenue growth.
In the meantime, Salesforce continues to expand its government relationships. CEO Benioff mentioned during the earnings call that the U.S. Department of Government Efficiency is using Slack, the company’s team communications platform. “We’ll work closely with the government,” he stated. “We’ll do anything we can to help them succeed.”
As of Wednesday’s close, Salesforce shares were down about 8% year-to-date in 2025, compared to the S&P 500 index’s gain of about 1% during the same period.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
