Salesforce, a prominent early advocate for artificial intelligence in business software, is facing scrutiny from investors as its stock performance lags. Despite positioning itself as a leader in the AI revolution, the company's shares have declined approximately 28% year-to-date, prompting analysts to question its strategy and core business health ahead of its annual Dreamforce conference.
Key Takeaways
- Salesforce (CRM) stock has fallen about 28% in 2025, underperforming despite its heavy focus on artificial intelligence.
- Analysts point to slowing growth in the company's core software-as-a-service (SaaS) businesses as a primary concern.
- Some experts suggest Salesforce's aggressive push into advanced "agentic AI" may have been too early for the market to adopt.
- Concerns are also rising about increased competition, including the potential for companies like OpenAI to enter the customer relationship management (CRM) market.
Stock Performance Raises Questions
As Salesforce prepares for its major AI-focused event, Dreamforce, the company's market performance presents a significant challenge. The stock closed at $241.68 on Friday, marking a fractional weekly gain but still contributing to a roughly 28% decline since the beginning of the year.
This downturn is reflected in key market indicators. According to IBD MarketSurge, Salesforce's Relative Strength rating, a measure of price performance against the broader market, has fallen to 15 from 74 a year ago. This sharp drop indicates significant underperformance and weakening investor confidence.
The upcoming Dreamforce conference is set to emphasize Salesforce's role as a leader in AI, promising to help businesses develop clear strategies. However, the disconnect between this messaging and the stock's trajectory has become a central puzzle for Wall Street.
Understanding Agentic AI
Agentic AI refers to systems where artificial intelligence plays a more autonomous role in operating business applications. Instead of just responding to user commands, these AI "agents" can proactively manage tasks, analyze data, and make decisions within the software, a trend Salesforce has aggressively promoted.
Analysts Highlight Slowing Core Growth
Several financial analysts argue that the company's challenges extend beyond its AI strategy, pointing to fundamental weaknesses in its traditional business lines. The growth in its core customer relationship management products appears to be slowing down.
Gil Luria, head of technology research at D.A. Davidson, noted that Salesforce's main businesses "have decelerated very significantly over the last couple of years." He suggests that the company's underlying technology is becoming outdated and is being challenged by newer competitors.
"There's a whole cottage industry of companies that are just taking business away from Salesforce. That's the problem," Luria stated in an interview with Investor's Business Daily.
This sentiment is shared by Brian White, an analyst with Monnes Crespi Hardt. While acknowledging that Salesforce is "well positioned" in AI, White holds a neutral rating on the stock. He cited "uninspiring" growth and a difficult macroeconomic environment as key concerns.
Financial Outlook Disappoints
Although Salesforce exceeded earnings estimates in its most recent quarterly report, its forward-looking guidance disappointed investors. The cautious outlook triggered a sell-off, reinforcing concerns about the company's growth trajectory.
A Bet on AI That Was Too Early?
One theory for the market's lukewarm reception to Salesforce's AI push is timing. The company was one of the loudest proponents of agentic AI, a concept that may have been ahead of its time for many corporate customers.
Crawford Del Prete, president of International Data Corp., explained that Salesforce made a "significant bet on agents" and oriented the company around this vision. However, this occurred when many businesses were still in the early stages of understanding generative AI and large language models.
"The downside of doing that is that they were probably a little bit early," Del Prete told IBD. He added that Salesforce needed to perform "a significant amount of missionary work" to educate customers, a process that takes time to translate into revenue.
Distraction or Necessary Evolution
Some analysts believe this intense focus on AI may have diverted resources and attention from Salesforce's established products. Luria suggested the company has been "distracted by the shift to AI" instead of investing in modernizing its core Sales Cloud, Marketing Cloud, and Service Cloud offerings.
However, Del Prete offered a different perspective. He argued that Salesforce was already facing growth challenges in a maturing software market before the recent AI boom. "I think that it's less about them taking their eye off the ball and more about trying to push that next generation and be the evangelists for that next generation of growth," he said.
Rising Competition and Investor Demands
The competitive landscape for business software is also intensifying. The rapid rise of generative AI has introduced new potential threats, with speculation that major AI players could move into Salesforce's territory.
BNP Paribas analyst Stefan Slowinski described investor sentiment for Salesforce as "negative," partly due to the perceived threat from OpenAI. In a note to clients, he wrote about "speculation OpenAI may enter the CRM SaaS market more formally."
According to Slowinski, investors are looking for concrete results, not just optimism about AI. He posed a critical question for the company: "What would make investors more comfortable?" His answer focused on two key areas:
- A commitment to see subscription revenue growth accelerate in the next fiscal year.
- A clear explanation of how Agentic AI will contribute to the company's revenue outlook.
While some fear AI could disrupt the entire software-as-a-service model, most experts believe that is a distant threat. For now, the focus remains on whether Salesforce can successfully integrate its AI innovations to re-energize its core business and convince investors that its long-term strategy will deliver growth.