3 Reasons Salesforce Is a Bargain Right Now

Key Points

• Salesforce shares have been bouncing off strong support despite a 30% drop since January.
• The company’s fundamentals remain robust, with a trimmed valuation now looking particularly appealing. 
• Plenty of analysts are still bullish, with recent price targets pointing to 30% upside.

Shares of Salesforce Inc. NYSE: CRM closed just above $245 on Wednesday, as they continued to rebound off the support line around the $230 mark. This was the level where the bears ran out of steam both back in April and again earlier this month, and it’ll be a reassuring signal for the bulls who might otherwise have been getting seriously worried. 

Still, the chart does not look flattering. Shares are down more than 30% from their January high, at a time when the broader tech market and equities in general have been printing fresh highs. It’s a glaring divergence, but one that could actually be quite interesting for those of us on the sidelines. 

Despite the recent softness, there are several reasons to think the market has this one wrong. Salesforce is far from broken, and much of the perceived downside could already be priced into the stock. Let’s jump in and take a closer look. 

1. Fundamentals Are Strong

Starting with the fundamentals, it must be noted that Salesforce is firing on almost all cylinders. Its most recent quarterly report delivered its second-highest revenue print on record. The company also easily beat analyst expectations on the headline numbers while delivering better-than-expected forward guidance. As reports go, you can’t really do a whole lot better.

Also, nearly 60% of Salesforce’s top 100 deals from the quarter included Data Cloud and AI products, whose revenue grew more than 120% year over year. These numbers underline just how successfully Salesforce embeds artificial intelligence into its core platform and monetizes it with enterprise customers.

Against this backdrop of growth and innovation, the stock’s retreat looks particularly misplaced. It seems to have also created a solid valuation setup that any optimistic but cautious bulls will welcome. Thanks to the pullback, Salesforce’s price-to-earnings (P/E) ratio has dropped below 40, a level it has not traded at in years and one that compares well to Oracle Corp’s NYSE: ORCL 54.

Investors are effectively being handed an opportunity to buy a market leader with accelerating AI adoption at a significant valuation discount to one of its biggest competitors. 

2. Analysts Remain Supportive

The bulls will also point to the fact that Wall Street has not lost faith despite the ongoing weakness. This week, the team over at Barclays reiterated its Overweight rating on Salesforce and set a fresh $316 price target, implying nearly 30% upside from current levels.

That call echoed the update from Stifel last week, which also maintained a Buy rating and issued a $325 target.

Such conviction from top-tier firms matters. In a sector where investors have been slow to forgive any signs of slowing growth, Salesforce still commands the belief that it can convert AI hype into real numbers.

That faith and the recent correction make for an appealing setup.

3. A Catalyst on the Horizon

Regarding the next significant catalyst, Salesforce’s Q2 earnings report is now less than two weeks away. That report could prove pivotal in flipping the narrative. Salesforce has been beaten down hard despite doing most things right, and the setup looks favorable for a rebound into the print.

Technically, the picture has also brightened. The stock’s MACD just flashed a bullish crossover this week, a classic momentum signal that suggests buyers are starting to return and take control. 

With shares bouncing off strong support and technical momentum shifting, there's a strong case to be made that Salesforce is setting up for a pre-earnings run.

A strong result in early September could spark a multi-month comeback, particularly if the company delivers another upside surprise in AI-driven revenue. For a stock currently trading back at 2020 levels, the risk-reward setup ahead of earnings looks particularly attractive. 

Watch for shares to continue consolidating, if not gaining, around and above the $250 mark into the weekend and next week. If next month's numbers once again surprise to the upside, the market might be forced to admit they got this one wrong and that Salesforce is indeed highly undervalued.