Salesforce stock looks undervalued as AI concerns weigh on shares

We all know Salesforce as a top‑name in cloud software and customer‑relationship tools. In 2025, the company will keep growing its cloud and AI business strongly. Its Data Cloud and AI services now bring in over US$1.2 billion in annual recurring revenue, up 120% year over year. Still, its stock is trading well below its past highs. Many investors are worried that the company’s big push into AI won’t pay off soon. That makes the current share price feel surprisingly low, especially when we look at how solid the business remains. We examine recent stock performance, how AI concerns shape investor sentiment, why the fundamentals still look strong, the key risks, and why Salesforce may still be a smart long-term play.

Recent Stock Performance

Over the past 12 months, Salesforce’s shares have dropped sharply. The stock is down roughly 30% year‑to‑date in 2025. That’s a big slide, especially considering its long-term track record. This drop comes even after Salesforce delivered a solid second quarter (fiscal 2026) in September: revenue hit US$10.2 billion, up 10% year‑on‑year. Profit margins remained healthy, and the company announced a big boost to its share‑buyback plan, raising the program by US$20 billion.

Still, the stock fell over 7% after the earnings report, because Salesforce’s guidance for the next quarter was modest. The forecast revenue range,  US$10.24–10.29 billion, slightly missed some analysts’ expectations. What we see is a classic case: strong results, but cautious outlook, and the market responded more to the caution than the strength.

AI Concerns Impacting Salesforce

A major reason for the stock’s drop is rising uncertainty over AI. Salesforce has invested heavily in AI platforms like Agentforce and its Data Cloud suite, betting that enterprises will adopt AI‑driven tools fast. But many investors worry that AI hype might have gone too far. Some see AI as an added cost, not a guaranteed revenue booster, especially if companies are careful about adopting new technologies during economic uncertainty.

In fact, for some buyers, AI remains an unproven extra. The sales cycles for AI-driven enterprise tools are slower, and many customers may delay or scale back adoption. That hesitation weighs on near-term expectations, even if the long-term promise remains. So, the fear isn’t about whether Salesforce is good, it’s whether its AI bet pays off quickly enough. Right now, that uncertainty is dragging down sentiment.

Salesforce’s Fundamentals Suggest Undervaluation

Even with these worries, Salesforce’s core numbers still look strong.

• Its most recent quarter (Q2 FY2026) delivered US$10.2 billion in revenue, up 10% year-over-year. Subscription and support, the steady backbone of its business, rose by 11%.
• Operating margins remain robust: GAAP margin 22.8%, non‑GAAP margin 34.3% in Q2, showing healthy profits.
• Shareholder returns are solid: the company returned US$2.6 billion via buybacks and dividends in that quarter alone, and it expanded its repurchase authorization to US$50 billion.
• The AI + Data Cloud segment, the fastest‑growing part of the business, now crosses US$1.2 billion in recurring revenue.

Analysts see this strength and believe the current stock price may not reflect the company’s long‑term potential. Some even argue that CRM stock looks undervalued compared with its cash flow, margins, and growth runway.

In short: th, ug,h growth has slowed a bit, the business remains healthy, and Salesforce still has powerful tools and offerings.

Risks and Challenges

But it’s not all smooth sailing. There are real risks for Salesforce going forward:

• AI adoption remains uncertain. Even though Agentforce is positioned as the future of CRM + AI, many customers may be slow to implement AI-driven tools or may take time to extract real value.
• Growth slowdown. While revenue is still growing, the pace has cooled compared with earlier years. Some quarters showed only modest growth, raising questions about whether Salesforce can deliver its historical high growth rates.
• Market headwinds. Broader market concerns around tech valuations, economic uncertainty, and rising competition (from other software firms and AI-savvy companies) add to the pressure.
• Execution risk. Big moves, like acquisitions (e.g., data‑management deals) or scaling AI, require flawless execution. If Salesforce missteps, investors might get spooked.

These challenges explain why many remain cautious, even if they see long-term potential.

Investment Outlook

So where does that leave us?

If we look long-term, over 3 to 5 years, Salesforce has real strengths. Its cloud software base remains solid. Its AI + Data Cloud business is scaling fast. Its margins are good. And its ability to return money to shareholders through buybacks and dividends is a plus. If AI adoption picks up across industries, as many expect it will, Salesforce could benefit disproportionately. That means the current dip in share price may actually be a buying opportunity. Of course, this isn’t risk-free. The pace of AI adoption, macroeconomic factors, and software competition will all matter. But for patient investors who believe in the cloud + AI future, Salesforce could be a strong long-term bet.

Conclusion

Yes, there are valid reasons why Salesforce stock is under pressure today. Investors are cautious about AI. Growth has slowed. Guidance isn’t aggressive. Yet, beneath the headlines, Salesforce’s business remains strong. Revenue is growing. Profits are healthy. AI and Data Cloud are scaling. Shareholders are getting returns. In our view: t,, AI cloud surrounding Salesforce may feel heavy now, but the company’s fundamentals shine bright. If you believe in digital transformation and AI‑driven enterprise adoption, Salesforce stock may be undervalued, worth a closer look.

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Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.