Salesforce’s Stock Price Presents an Opportunity to Buy

Key Points

• Salesforce is gaining traction with AI-enabled tools, such as Data Cloud and Agentforce.
• The analysts' responses are mixed, with equal numbers of price target increases and decreases, narrowing the range around a 30% upside forecast. 
• Cash flow and free cash flow are growing, sustaining a healthy outlook for accelerating capital returns.

Salesforce’s NYSE: CRM stock price is rebounding from the April lows, and the move is just getting started. The company is a leader in AI-assisted data management and CRM services, an industry that is still in the earliest phases of adoption. Among the critical takeaways is that its unified, AI-powered platform is gaining traction and driving sustainable growth.

That growth will be accelerated in the next fiscal year due to acquisitions such as Informatica, a business specializing in unifying diverse data assets, which will help sustain a robust cash flow and capital return. 

The analysts’ response to the Q1 results and guidance update is mixed, with equal numbers of price target reductions and increases, and bearish bias due to a single downgrade.

However, the takeaway for investors is that this stock is still pegged at a Moderate Buy, it is one of the highest-rated stocks tracked by MarketBeat, and the consensus price target forecasts a new all-time high. The net result of the revisions is a narrowing of targets around the consensus $345, aligning with current all-time highs, which would yield a 25% gain upon reaching it, with most revisions leading to an above-consensus range.

Salesforce Gains Traction With AI in Q1

Salesforce’s Q1 release and guidance update were good. The company produced better-than-expected results and improved the guidance, providing no reason for the post-release price pullback that ensued. The company grew its revenue by 7.7% to $9.83 billion, outpacing MarketBeat’s consensus by nearly 100 basis points, on strength in the core business, led by newer and new offerings, including Data Cloud and Agentforce. Total Data Cloud and AI-related spending grew by 120% YOY, with more than 60% of new deals including the service. 

The margin news is also good. The company widened its gross and operating margins to drive accelerated growth in the core business. The only bad news is that increased marketing and higher taxes cut into the cash flow, leaving it up only 4% compared to the prior year. The critical detail is that both cash flow and free cash flow are growing, which helps sustain the outlook for capital returns. 

The dividend yield isn’t robust, at just over 0.6% in late May, but it is reliably safe, accounting for less than 15% of the F2026 earnings forecast and compounded by share buybacks. The buybacks are more substantial, reducing the share count by an average of 1.5% for the quarter.

They are expected to continue robustly this year and for the foreseeable future. Regarding dividend growth, Salesforce has only paid its distribution for five quarters, but has already set the precedent, indicating that a path of annual distribution increases can be expected. 

Salesforce’s balance sheet provides no red flags for investors. The highlights include reduced assets related to share buybacks, offset by a reduction in liability, steady equity, and a 1.5% decrease in shares. The critical details are that cash is ample and leverage is low, with long-term/non-current debt under 0.15x equity and a balance sheet with net cash, leaving the company in a fortress-like financial condition.  

The Technical Outlook: Salesforce Pulls Back Into a Buying Opportunity

Investors who missed out on an entry into CRM stock earlier this year have another opportunity in June. The market for this stock pulled back sharply following the release, setting up an attractive price point. The risk is that this stock will decline to retest its recent lows before the subsequent rebound begins.

However, the risk of a lower low is minimal due to the favorable growth outlook, robust cash flow, and positive analyst sentiment. The more likely scenario is that this stock will begin to rebound before retesting the low.