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✅ Main takeaway:
Key takeaways
- Salesforce shares rose Thursday on signs that its artificial intelligence offerings are taking off, though they remain in negative territory for the year.
- Wall Street analysts are broadly bullish on the stock, suggesting investors are underestimating the software giant as they wait to see more evidence of its progress in artificial intelligence.
Does Salesforce’s new momentum have the stock on its way back?
Shares rose nearly 4% to close Thursday near $248, making Salesforce (CRM) one of the biggest gainers in the S&P 500, a day after the company posted better-than-expected earnings helped by demand for its artificial intelligence offerings and raised its forecasts.
Today’s action brought the stock to its highest level in about a month. However, the stock still has a way to go before it recovers from the losses it suffered earlier this year amid concerns about the company’s future. The stock is still down about 30% for 2025.
Why is this important?
Salesforce shares have lagged many of their software peers this year, missing out on the artificial intelligence rally that has boosted shares of a wide range of companies. Thursday’s gains with a stronger outlook and signs that it is making progress may signal a turnaround.
Morgan Stanley analysts, who reiterated an “overweight” rating and a high Street target of $405 after the company’s results, told clients they believe investors are underestimating the software giant’s artificial intelligence potential.
“It may take a few additional data points for the skeptical investor base to come on board,” they said. However, analysts said they would be buyers at this point, with signs of new AI-related business picking up and bookings headwinds easing.
Analysts at Bank of America pointed to Salesforce’s backlog, which expanded faster than expected, as another strong signal of future demand that reinforces their bullish case and target of $305 per share.
Jefferies analysts, who maintained a $375 target rating and a “buy” rating, said they believe the company’s outlook for the current quarter may be conservative, leaving room for another upside surprise.
While Wall Street’s ratings may be in flux, most analysts are standing firm in their support of the stock. Of the 18 analysts surveyed by Visible Alpha, 14 issued “buy” calls, compared to four with neutral ratings. Their average target around $330 indicates an almost complete recovery to their levels to start the year.
⚡ What do you think?
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