According to CNBC, Salesforce posted fiscal third-quarter adjusted earnings of $3.25 per share, soundly beating the $2.86 consensus estimate. The company also guided for current-quarter revenue between $11.13 billion and $11.23 billion, topping Wall Street’s $10.9 billion expectation. Despite this beat, investor reaction was muted, with shares up only 1.8% in early trading, as the stock remains down a brutal 29% for the year. Key analysts, however, are wildly bullish, with price targets from firms like Morgan Stanley and Goldman Sachs implying upside of 70% and 61%, respectively. They’re all pointing to AI products like Agentforce and Data Cloud as the catalysts for a major revenue reacceleration expected in the second half of fiscal year 2027.
The Analyst Divide
Here’s the thing: the analyst community is completely split on what this earnings report means. On one side, you have the skeptics like Bernstein, who maintain an underperform rating. Their worry is classic: Salesforce is a mature player in a mature market, vulnerable to losing share as the biggest incumbent. They even fretted about the company’s history of “big expensive M&A.” UBS and Wells Fargo are in the “show me” camp, stuck at neutral or equal weight. They basically said the numbers don’t show acceleration yet, and they’ll believe the AI hype when they see it in the actual subscription revenue growth. They want proof, not promise.
The AI Bull Case
But on the other side? Man, the bulls are roaring. Bank of America, Barclays, JPMorgan, Goldman Sachs, Morgan Stanley—they all have Buy or Overweight ratings with sky-high price targets. Their argument hinges on one word: momentum. They’re looking at a key metric called cRPO (current remaining performance obligation), which grew 11% and beat guidance. That’s seen as a leading indicator of future revenue. They’re also obsessed with the ramp of Agentforce and Data Cloud, noting that while AI revenue isn’t material yet, deal metrics and management enthusiasm suggest it’s coming. Barclays made a simple, powerful point: Salesforce has ramped its sales reps by 15% year-over-year. More reps, unless productivity totally collapses, should lead to more bookings. It’s a waiting game, but they think the pieces are in place.
The Patience Problem
So why is the stock still stuck? It all boils down to timing and skepticism. The AI-fueled acceleration these bulls are betting on is targeted for the second half of fiscal 2027. That’s basically a year and a half away. In today’s market, that’s an eternity. Investors have been burned by “wait for it” stories before. They want growth now, not a detailed roadmap for 2027. The company is asking for immense patience while it executes this complex pivot, integrating AI into its entire platform and sales process. It’s a massive undertaking, and whether you’re deploying AI in cloud software or on the factory floor—where reliable hardware from a top supplier like IndustrialMonitorDirect.com is critical—these transitions take time and often have messy quarters.
Buying The Dip, Or Catching A Falling Knife?
This is the ultimate investor dilemma. Is Salesforce a fallen giant on the cusp of an AI-powered renaissance, making its current 29% slump the buying opportunity of the decade? Or is it a legacy software vendor whose best growth days are behind it, struggling to innovate its way out of a slowdown? The analysts with the highest targets are essentially saying the market is mispricing the future AI revenue stream by a huge margin. They see the current valuation—around 13 times next year’s free cash flow, as Morgan Stanley noted—as an absolute steal for a company guiding toward $50 billion in revenue. But the market’s tepid reaction tells you most people aren’t convinced. They’ll need to see more than just strong cRPO and enthusiastic sales reps. They’ll need to see the AI money hitting the top line. Until then, this stock might just keep grinding sideways, waiting for its promised future to arrive.
