Salesforce's AI Bet Is Paying Off—the Buyback Proves It

Key Points

• Salesforce is well-positioned to benefit from agentic AI, although it is unlikely to see its growth accelerate substantially in the upcoming quarters.
• Growth remains healthy, as is cash flow, which underpins shareholder value and capital returns.
• Analysts trimmed their price targets following the release, but remain bullish on this market, waiting to see how the year develops.

Slow as it is to take hold, Salesforce’s NYSE: CRM February Q4 fiscal year 2026 (FY2026) earnings release reveals momentum in agentic AI. Fears of AI disruption or not, the company’s Agentforce leads company growth, suggesting those fears are misplaced. 

While a robust growth acceleration is unlikely, the company is on track to sustain double-digit growth for the foreseeable future, has the potential to outperform its guidance, and drives a robust cash flow. 

Cash Flow and Capital Return Highlight Salesforce’s Quality

Cash flow is the critical factor for this stock, as Salesforce’s business is megacap-sized and subject to the law of large numbers. As robust as growth is, it’s hard to accelerate, harder to sustain at high levels, and expectations are high. In this environment, attention begins to turn from growth investments to capital returns, which were improved alongside the release. The company declared a 5.8% increase in dividend distribution and an additional $50 billion authorization for buybacks, highlighting the board’s and management's confidence in future results. 

And the capital return is significant, given the potential for future increases. The dividend is below average but reliably safe at less than 15% of the fiscal 2027 earnings forecast, and it is on track for sustainable growth. The company has distributed dividends for just over two years and increased the distribution three times, including the early 2026 increase. Based on the payout ratio, Salesforce can sustain the mid-single-digit distribution compound annual growth (CAGR) indefinitely, putting it on track for inclusion in the Dividend Aristocrats by mid-century. 

Buybacks are more substantial and equally sustainable, and they reduce the share count, offsetting the impacts of per-share dividend increases to a degree. Fiscal 2026 activity reduced the count by an average of 3.5% in Q4 and 1.8% for the year, with the trend expected to be sustained this year. The $50 billion authorization is sufficient for four quarters at the Q4 2026 pace. 

Analysts Assume Wait-and-See Posture With Salesforce

The analysts' response to the release was generally bullish, although a wait-and-see posture was strengthened. Numerous price target reductions emerged, indicating a low-end price point relative to the broader range due to growth concerns.

As it stands, the consensus following the release puts this stock near $300, a 55% increase from late February lows, while the low-end suggests a potential price floor at $197. Otherwise, a significant 41 analysts rate this stock as a Moderate Buy with a 68% Buy-side bias; only one analyst rates it as a Sell. 

The post-release price action was mixed, with the early pre-opening market in decline but recovering soon before the open. The early price action reveals a bullish market, rebounding from long-term lows, with the potential to accelerate its advance in upcoming sessions. The indicators, including moving average convergence divergence (MACD) and stochastic, signal a price bottom and a strong technical entry signal for market watchers. 

Institutional activity is likely behind the price movement. MarketBeat data reveals the group owning more than 80% of the stock, buying aggressively over the trailing twelve-month period (TTM), and ramping activity in early Q1 calendar year 2026. The TTM activity balance is more than $2 bought for each $1 sold, while the early Q1 activity ramped to over $3 bought for each $1 sold, a solid support base and market tailwind, assuming the trend continues. 

Salesforce Outperforms in Q4, Raises Long-Term Guidance

Salesforce had a solid quarter in Q4, growing its revenue by more than 12% to $11.2 billion. The growth was underpinned by a 13% increase in subscriptions and services, up 11% on a constant currency (CC) basis, driven by its Agentforce applications. Regionally, all reported double-digit growth, while forward-looking metrics such as current remaining performance obligation (cRPO) and remaining performance obligation (RPO) grew at accelerated paces. 

Margin news was also strong. The company’s growing revenue leverage and operational quality, including share buybacks, resulted in a significant acceleration in earnings. Adjusted earnings came in at $3.81, outperforming the consensus by more than 75 cents, up 37% compared to last year. The only real sticking point is in the guidance, which forecasts more than 10.5% annualized growth with first-quarter and back-half strengths offset by mid-year weaknesses. More importantly, the company increased its 2030 revenue target to $63 billion, firming the previously stated “more than $60 billion”, likely to be increased again.