- Salesforce (CRM) shares dropped 2.40% to $241.40 in early trading after DA Davidson downgraded the stock to ‘Underperform’ from ‘Neutral,’ lowering the price target to $200 from $250 and removing it from the “Best-of-Breed Bison” list.
- The downgrade stems from concerns that Salesforce is prioritizing a premature AI push with Agentforce, which may only enhance existing tools, potentially overstating AI revenue and neglecting its core CRM business.
- The stock has declined 28% since January and 11% year-over-year, reflecting investor doubts about Salesforce’s strategic focus amid expected organic growth deceleration in non-Data/AI cloud segments.
Salesforce (CRM) faces mounting pressure in the competitive enterprise software market, with its shares declining 2.40% to $241.40 in Monday’s early trading hours, following a downgrade by DA Davidson from ‘Neutral’ to ‘Underperform,’ accompanied by a reduced price target of $200 from $250. The downgrade, which also removed Salesforce from DA Davidson’s “Best-of-Breed Bison” list, reflects concerns that the company is prioritizing a premature push into artificial intelligence, particularly through its Agentforce platform, at the expense of its core customer relationship management (CRM) business. The firm argues that Agentforce, rather than being a true AI agent, merely enhances existing tools with AI capabilities, potentially overstating its AI-driven revenue contributions and risking further deceleration in organic growth for Salesforce’s non-Data/AI cloud segments.
The broader market context underscores Salesforce’s challenges, with its stock plummeting 28% since January and declining 11% year-over-year, signaling investor skepticism about its strategic direction amid intense competition from rivals like Microsoft (MSFT) and Oracle (ORCL). DA Davidson’s critique highlights the delicate balance Salesforce must strike as it seeks to capitalize on the AI boom, driven by innovations like generative AI, while maintaining leadership in its core CRM offerings, which have historically powered its growth. The perceived overemphasis on AI, at a time when enterprise adoption of advanced AI agents remains nascent, could erode confidence in Salesforce’s ability to sustain its market-leading position, particularly if its non-AI segments underperform. As the company navigates these headwinds, its ability to integrate AI effectively without neglecting its foundational business will be critical to reversing the current downward trajectory and restoring investor trust.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply