Salesforce (NYSE:CRM) Shares Gap Up After Better-Than-Expected Earnings

Key Points

• Salesforce shares surged: The stock opened at $230.05 versus a prior close of $205.62 after the company reported quarterly EPS of $5.90, beating the $3.27 consensus. Revenue reached $11.35 billion, up 10.8% year over year and slightly above estimates.
• Outlook and AI momentum strengthened: Salesforce raised its fiscal 2027 guidance, while Agentforce annual recurring revenue reached $1.5 billion and AI usage on the platform increased sixfold. The company also expanded its partnership with Anthropic through the new Claudeforce integration.
• Analysts remain broadly positive, but risks persist: Salesforce has a “Moderate Buy” consensus rating and an average price target of $254.33, though revenue growth near 11%, stock volatility and concerns about AI-driven disruption remain challenges.

Shares of Salesforce Inc. (NYSE:CRM - Get Free Report) gapped up before the market opened on Thursday following a better than expected earnings announcement. The stock had previously closed at $205.62, but opened at $230.05. Salesforce shares last traded at $246.7770, with a volume of 11,656,799 shares changing hands.

The CRM provider reported $5.90 EPS for the quarter, topping the consensus estimate of $3.27 by $2.63. The company had revenue of $11.35 billion during the quarter, compared to analysts' expectations of $11.33 billion. Salesforce had a net margin of 18.73% and a return on equity of 18.72%. Salesforce's revenue was up 10.8% on a year-over-year basis. During the same quarter in the previous year, the company earned $2.91 EPS. Salesforce has set its FY 2027 guidance at 16.670-16.710 EPS and its Q3 2027 guidance at 3.420-3.440 EPS.

More Salesforce News

Here are the key news stories impacting Salesforce this week:

• Positive Sentiment: Earnings beat expectations: Salesforce reported adjusted earnings of $5.90 per share, well above the $3.27 analyst consensus, while revenue rose 10.8% year over year to $11.35 billion, slightly exceeding estimates. Salesforce Q2 Earnings and Revenues Top Estimates
• Positive Sentiment: Raised outlook: Management increased fiscal 2027 guidance to $46.1 billion-$46.4 billion in revenue and $16.67-$16.71 in EPS. Third-quarter EPS guidance of $3.42-$3.44 also exceeds the $3.16 consensus, signaling confidence in sustained growth. Salesforce Raises Annual Revenue Forecasts on AI Product Momentum
• Positive Sentiment: AI adoption is accelerating: Agentforce annual recurring revenue reached $1.5 billion, and management said AI usage on the platform increased sixfold. These metrics help counter fears that generative AI could replace traditional enterprise software. Salesforce Q2 2027 Earnings Call Highlights
• Positive Sentiment: Anthropic partnership expands: Salesforce and Anthropic introduced “Claudeforce,” integrating Claude with Salesforce data, workflows and 37 prebuilt sales skills. The collaboration supports Salesforce’s effort to make AI agents a growth engine and reinforces its competitive positioning. Salesforce and Anthropic Announce Claudeforce
• Neutral Sentiment: Analyst sentiment improved: Needham reaffirmed its Buy rating with a $400 target, while Monness Crespi & Hardt raised its target to $266 and Cantor Fitzgerald maintained Overweight with a $250 target. These targets imply substantial upside but do not guarantee future performance.
• Negative Sentiment: Risks remain: Revenue growth remains near 11%, and Salesforce’s stock has been volatile amid concerns about AI-driven software disruption. The large investment gain cited in the quarter may also be less recurring than operating results.

Analyst Ratings Changes

CRM has been the topic of a number of analyst reports. Evercore reissued an "outperform" rating on shares of Salesforce in a research note on Thursday. Canaccord Genuity Group reaffirmed a "buy" rating and set a $225.00 price objective on shares of Salesforce in a research note on Tuesday. Deutsche Bank Aktiengesellschaft reiterated a "buy" rating on shares of Salesforce in a report on Thursday. Phillip Securities lowered Salesforce from a "buy" rating to a "hold" rating and cut their target price for the company from $253.00 to $166.00 in a research note on Monday, June 29th. Finally, Truist Financial restated a "buy" rating and set a $300.00 target price (up from $280.00) on shares of Salesforce in a research report on Thursday. Two analysts have rated the stock with a Strong Buy rating, twenty-eight have given a Buy rating, fifteen have given a Hold rating and two have assigned a Sell rating to the company. According to data from MarketBeat.com, Salesforce presently has an average rating of "Moderate Buy" and an average target price of $254.33.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently added to or reduced their stakes in the business. California State Teachers Retirement System grew its position in shares of Salesforce by 13,260.5% in the 2nd quarter. California State Teachers Retirement System now owns 188,085,056 shares of the CRM provider's stock valued at $29,465,405,000 after purchasing an additional 186,677,290 shares during the period. BlackRock Inc. acquired a new stake in Salesforce during the 2nd quarter worth approximately $11,396,844,000. J. Stern & Co. LLP lifted its stake in Salesforce by 24,056.7% in the fourth quarter. J. Stern & Co. LLP now owns 47,385,511 shares of the CRM provider's stock valued at $12,552,896,000 after buying an additional 47,189,352 shares in the last quarter. Bank of America Corp DE bought a new position in Salesforce in the second quarter valued at approximately $1,914,086,000. Finally, Norges Bank acquired a new position in shares of Salesforce in the fourth quarter valued at approximately $3,182,951,000. 80.43% of the stock is currently owned by institutional investors.

Salesforce Price Performance

The company's 50-day moving average price is $177.13 and its 200-day moving average price is $181.60. The company has a debt-to-equity ratio of 1.15, a current ratio of 0.79 and a quick ratio of 0.79. The company has a market cap of $203.18 billion, a P/E ratio of 28.64, a P/E/G ratio of 1.11 and a beta of 1.16.

Salesforce Company Profile

Salesforce, founded in 1999 and headquartered in San Francisco, is a global provider of cloud-based software focused on customer relationship management (CRM) and enterprise applications. The company popularized the software-as-a-service (SaaS) model for CRM and has built a broad portfolio of products designed to help organizations manage sales, service, marketing, commerce and analytics through a unified, cloud-first platform.

Core offerings include Sales Cloud for sales automation, Service Cloud for customer support, Marketing Cloud for digital marketing and engagement, and Commerce Cloud for e-commerce.

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