Salesforce (CRM), a leading provider of cloud-based software solutions, has had a challenging start to 2025. Despite reporting strong financial results, the company's stock dropped 3.3% yesterday. The stock has fallen 21.1% year to date, raising concerns about its near-term prospects. Nonetheless, Wall Street is optimistic about the stock, rating it a "Strong Buy" and expecting it to surge by up to 65% from current levels. Let’s find out why.

Is Salesforce Poised for a Comeback? 

Salesforce is well-known for its customer relationship management (CRM) platform. The company helps businesses manage and automate customer interactions and other services using a unified cloud-based system. Salesforce primarily uses a subscription-based model, charging businesses recurring fees to access its Software-as-a-Service (SaaS) offerings.

In the first quarter of fiscal year 2026, Salesforce reported revenue of $9.8 billion, an 8% increase year-over-year, and adjusted earnings of $2.58 per share, surpassing analyst expectations. Subscription and support revenue, which accounts for a significant portion of total income, increased by 8% year on year to $9.3 billion. The current remaining performance obligation (CRPO) has increased by 12% to $29.6 billion, indicating a strong future revenue outlook. 

Salesforce has been actively investing in artificial intelligence (AI) to enhance its product offerings. The company launched its AI platform, Agentforce, in September 2024 with the goal of automating customer service and sales processes. Since its inception, Agentforce has closed over 8,000 deals, with paid engagements accounting for half of them. The platform has contributed to Data Cloud and AI annual recurring revenue exceeding $1 billion, representing 120% year-over-year growth.

While Agentforce has shown promise, Citi analysts are cautious, seeing it as a "show-me story" that needs more validation as a catalyst for long-term growth. Citi lowered CRM's price target to $295 from $320, with a “Neutral” rating. Morgan Stanley analysts share the same sentiment, stating that despite strong results, investors are concerned about macroeconomic headwinds affecting Salesforce.

Additionally, to further enhance its data capabilities, Salesforce announced plans to acquire data management company Informatica for approximately $8 billion. This acquisition aims to improve Salesforce's AI capabilities by providing cleaner and more integrated data to Agentforce. However, some analysts are concerned about Salesforce's reliance on acquisitions over organic innovation. 

On the balance sheet, Salesforce ended the quarter with $17.4 billion in cash, cash equivalents, and marketable securities. CRM generated significant free cash flow (FCF) of $6.3 billion in the quarter, paying out $402 billion in dividends and $2.7 billion in share repurchases. The company also raised its full-year revenue guidance to between $41.0 billion and $41.3 billion, up from $40.5 billion to $40.9 billion previously. This represents an 8% to 9% increase over fiscal 2025. Adjusted EPS is now expected to range between $11.27 and $11.33, reflecting confidence in long-term growth.

Analysts covering CRM stock expect revenue to increase by 8.6% in fiscal 2026, followed by a 10.8% increase in earnings. Furthermore, revenue and earnings are expected to increase by 8.9% and 11.9% in fiscal 2027, respectively. 

CRM, trading at 23 times forward earnings, is a reasonably valued AI stock to buy right now. Despite short-term headwinds, the company's strategic focus on AI integration, data management, and expanding go-to-market capacity position it well to capitalize on rising demand for enterprise software solutions. 

What Does Wall Street Say About CRM Stock?

Despite the stock's underperformance this year, many analysts believe Salesforce has a bright future. J. Parker Lane of Stifel Nicolaus maintains a “Buy” rating on CRM stock, with a price target of $375. Lane believes that while the company is still in the early stages of monetizing its AI offerings, early signs - such as multi-product deals and gaining traction in the SMB and mid-market segments - point to a promising future. Similarly, Jefferies analysts maintained a “Buy” rating for the stock. 

Overall, on Wall Street, Salesforce stock is a “Strong Buy.” Out of the 47 analysts that cover the stock, 34 rate it a “Strong Buy,” while three recommend a “Moderate Buy,” eight rate it a “Hold,” and two suggest a “Strong Sell.” Based on the average target price of $362.77, CRM stock has upside potential of 36% from current levels. Its high target price of $440 suggests the stock could rally 65% over the next 12 months. 

The Verdict: A Path to Recovery

Salesforce's first-quarter results demonstrate resilience, with strong revenue growth and strategic investments in AI positioning the company for long-term success. While short-term challenges have influenced investor sentiment, the company's long-term prospects remain favorable. Salesforce could make a big comeback, pushing its stock to its high target price of $440 if it can successfully integrate its acquisitions and deliver on its AI initiatives.