Shares of CRM software giant Salesforce (NYSE:CRM) jumped 5.4% in the afternoon session after Guggenheim’s John DiFucci upgraded the stock from Neutral to Buy with a $228 price target implying roughly 45% upside.
DiFucci called the fatal AI bear case on software a “hallucination.” While he still sees agentic AI as a genuine risk to Salesforce, he argued “the Armageddon scenario currently priced into the stock is misaligned with reality.”Like his same-day ServiceNow upgrade, this was a valuation call rather than an AI cheerlead. But for Salesforce the value case rests on a concrete AI proof point the skeptics can’t easily dismiss. In Q1 FY27 (reported May 27), Salesforce beat across the board: revenue rose 13% to $11.13 billion, non-GAAP EPS of $3.88 topped the $3.12 consensus by 24%, non-GAAP operating margin hit a record 34.8%, and the company raised full-year revenue guidance to $45.9–$46.2 billion.
Critically, Agentforce, its agentic-AI product launched only in September 2024, reached $1.2 billion in annual recurring revenue, up 205% year-over-year, one of the fastest enterprise-software ramps on record. Salesforce also returned $27.5 billion to shareholders (including a $25 billion accelerated buyback), supporting per-share earnings.
After the initial pop, the shares cooled down to $164.28, up 4.9% from the previous close.
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Salesforce’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 9 days ago when the stock dropped 1.8% on the news that a confluence of high-profile AI talent departures from Alphabet, and a regulatory overhang pulled the entire communication-services and software complex lower. Alphabet fell roughly 6%. Microsoft slipped as well.
When the two largest software-adjacent megacaps decline together, the sector indices follow mechanically given their index weight. But the deeper driver was the market’s persistent fear that AI agents would erode the subscription model that underpins traditional enterprise software economics. That fear had been compounding all year. Salesforce trades around $152, down roughly 43% year-to-date and near its 52-week low. Adobe fell approximately 49% over the past year and has not traded this cheap on earnings in over a decade.
