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Salesforce spent a record $27 billion on stock buybacks in a single quarter, including $25 billion in accelerated repurchases funded by newly issued debt, as CEO Marc Benioff pushes back against Wall Street’s fears that AI will disrupt the software-as-a-service industry. The stock remains down more than 25% in 2026 despite record quarterly revenue of $11.1 billion and a 52% jump in earnings per share. Salesforce’s AI products, Agentforce and Data 360, saw combined annualized recurring revenue double year over year, while customer usage of agentic AI surged to 1.6 billion interactions in the first quarter. The company trades at roughly 14 times forward earnings, a historically low valuation that management views as an opportunity to repurchase shares. Citigroup recently raised its price target to $204, suggesting some analysts see the sell-off as overdone.
Key Elements
Salesforce(NYSE: CRM) is making an unprecedented wager that Wall Street’s anxiety over artificial intelligence decimating the software industry is misplaced. The customer relationship management giant spent a record $27 billion on stock repurchases in a single quarter, a move CEO Marc Benioff framed as a direct rebuttal to what he calls the “SaaSpocalypse” — the brutal sectorwide sell-off that has punished software-as-a-service companies throughout 2026.
The buyback surge, which included $25 billion in accelerated repurchases funded by newly issued debt, comes as Salesforce shares remain down more than 25% year to date through mid-August. The stock, which traded above $300 per share in 2025, hit a multiyear low of $146.32 in June before recovering modestly. Benioff has been unambiguous in his assessment of the market‘s reaction, declaring that “the software bears are dead wrong.”
Salesforce’s decision to load up on debt to repurchase beaten-down shares reflects a calculated bet on the company’s valuation. The bonds issued to fund the buyback carry interest rates ranging from 4.5% to 6.7%. While that is not cheap financing, management is effectively arguing that the cost of equity is far higher — meaning the stock is undervalued relative to the company’s actual growth prospects.
At roughly 14 times forward earnings, Salesforce trades at a historically depressed multiple. That valuation implies the market expects years of sluggish revenue growth, if not outright contraction. Yet the company’s actual performance tells a different story. In its fiscal first quarter ended April 30, Salesforce generated record revenue of $11.1 billion, up 13% year over year. The strong start prompted management to raise its full-year revenue forecast to a range of $45.9 billion to $46.2 billion, up from $41.5 billion in the prior year.
Much of the optimism centers on Salesforce’s AI offerings, particularly Agentforce and Data 360. Combined annualized recurring revenue for the two products doubled year over year in the latest quarter. Customer usage of Salesforce’s agentic AI has exploded, with clients tapping the technology 1.6 billion times in the first quarter, compared with just 14 million times two years earlier. Benioff has described agentic AI as “the biggest growth opportunity” for the company.
The financial results underscore the operational leverage at play. Fiscal first-quarter diluted earnings per share came in at $2.42, a 52% year-over-year increase. Management is targeting an adjusted operating margin of approximately 40% by fiscal 2030, up from about 34% currently, as AI products scale and overhead remains disciplined.
Some Wall Street analysts are beginning to recalibrate their views. On Aug. 18, Citigroup raised its price target on Salesforce to $204 from $187. The upgrade follows comments from Goldman Sachs CEO David Solomon, who suggested the SaaSpocalypse sell-off went overboard. By comparison, competitor HubSpot trades at a forward P/E of around 17, a premium to Salesforce’s multiple despite facing similar industry headwinds.
The buyback strategy does carry trade-offs. The additional debt will weigh on free cash flow for years as interest payments rise. But Benioff’s team is effectively front-loading a $50 billion repurchase authorization to capitalize on what it sees as a temporary dislocation in the stock price. Whether that conviction proves prescient depends on whether Salesforce can sustain revenue momentum and demonstrate that AI agents complement rather than cannibalize its core software business.
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