Salesforce (CRM) delivered a strong first quarter earnings report, posting revenue of $9.83 billion—about $80 million ahead of expectations and 8% higher than a year earlier.
Adjusted earnings per share came in at $2.58, beating Wall Street’s forecast and marking a solid improvement from $2.44 a year ago. The software giant also raised its full-year forecast, projecting as much as $41.3 billion in revenue for fiscal 2026.
Yet, shares of Salesforce tumbled more than 7% in early Thursday trading, their biggest one-day drop since May 30, 2024. The market reaction highlights a widening gap between strong operating performance and growing investor unease over the company’s strategic direction—especially its return to large acquisitions.
On Wednesday evening, Salesforce confirmed it will acquire data integration firm Informatica for $8 billion, reigniting investor concerns about the company’s M&A-heavy growth strategy.
Informatica Buy Raises Questions About Strategy and Innovation
Salesforce says the Informatica acquisition will turbocharge its artificial intelligence initiatives, especially Agentforce—its AI-driven software platform that automates complex workflows. Agentforce has already reached $100 million in annual recurring revenue and boasts over 4,000 paying customers.
"Bringing Informatica in helps complete the data picture," said Mike Spencer, Executive VP of Investor Relations at Salesforce. “It helps stitch non-Salesforce data together in a much tighter fashion.”
Still, Wall Street is split on the move. RBC Capital Markets downgraded the stock, slashing its price target from $420 to $275. Analyst Rishi Jaluria cited concerns over the company reverting to acquisition-driven growth. “While Salesforce has always been a major acquirer,” he said, “recent acquisitions like MuleSoft, Tableau, and Slack have had a mixed track record.”
Others, including Guggenheim's John Difucci, were more forgiving. He noted that key forward-looking metrics like current remaining performance obligation (CRPO) rose 12% year over year—a signal of strong future bookings.
Salesforce emphasized the Informatica deal would be accretive to earnings starting in fiscal 2027. But for now, integration challenges loom large.
Salesforce says the Informatica acquisition will turbocharge its artificial intelligence initiatives, especially Agentforce—its AI-driven software platform that automates complex workflows. Agentforce has already reached $100 million in annual recurring revenue and boasts over 4,000 paying customers.
"Bringing Informatica in helps complete the data picture," said Mike Spencer, Executive VP of Investor Relations at Salesforce. “It helps stitch non-Salesforce data together in a much tighter fashion.”
Still, Wall Street is split on the move. RBC Capital Markets downgraded the stock, slashing its price target from $420 to $275. Analyst Rishi Jaluria cited concerns over the company reverting to acquisition-driven growth. “While Salesforce has always been a major acquirer,” he said, “recent acquisitions like MuleSoft, Tableau, and Slack have had a mixed track record.”
Others, including Guggenheim's John Difucci, were more forgiving. He noted that key forward-looking metrics like current remaining performance obligation (CRPO) rose 12% year over year—a signal of strong future bookings.
Salesforce emphasized the Informatica deal would be accretive to earnings starting in fiscal 2027. But for now, integration challenges loom large.
AI Drives Efficiency—but Job Cuts and Uncertainty Cloud the Outlook
Beyond the numbers, Salesforce is also navigating the economic and workforce shifts brought on by AI. The company credited internal use of AI tools for helping reduce hiring needs. Roughly 500 customer service jobs were repurposed, saving an estimated $50 million.
“We have reduced some of our hiring needs,” said CFO Robin Washington. Still, CEO Marc Benioff insisted Salesforce is focused on “repositioning employees, not replacing them,” and announced plans to hire 1,000 to 2,000 more salespeople to expand distribution, particularly to small and mid-sized businesses.
The broader tech industry is undergoing a similar transformation. Microsoft (MSFT), Alphabet (GOOG), Meta (META), and others are increasingly relying on AI to write code, moderate content, and handle customer service tasks.
At Salesforce, that strategy is being executed through Agentforce and its broader data ecosystem. The company reported its Data Cloud business now generates over $1 billion in recurring revenue, up more than 120% from last year.
Still, questions remain about how quickly these emerging AI products will materially impact Salesforce’s bottom line. As DA Davidson analyst Gil Luria noted, “AI’s 2% does great; the other 98% decelerates.”
Conclusion
Salesforce has painted a compelling vision: one in which AI transforms productivity, clean data powers smarter automation, and the company reclaims its reputation for bold innovation. The numbers—record revenue, $100 million in Agentforce subscriptions, $1 billion in Data Cloud ARR—tell a story of momentum. Yet skepticism remains.
Wall Street is watching closely. Some analysts question whether the Informatica acquisition signals a strategic revival or a return to expensive deal-making. Others wonder how long it will take for Agentforce and Data Cloud to materially impact the company’s overall growth.
For now, Salesforce finds itself at a crossroads: investors are rewarding vision, but will demand execution. The pressure is on Marc Benioff and his team not just to sell the future—but to deliver it.
Salesforce has painted a compelling vision: one in which AI transforms productivity, clean data powers smarter automation, and the company reclaims its reputation for bold innovation. The numbers—record revenue, $100 million in Agentforce subscriptions, $1 billion in Data Cloud ARR—tell a story of momentum. Yet skepticism remains.
Wall Street is watching closely. Some analysts question whether the Informatica acquisition signals a strategic revival or a return to expensive deal-making. Others wonder how long it will take for Agentforce and Data Cloud to materially impact the company’s overall growth.
For now, Salesforce finds itself at a crossroads: investors are rewarding vision, but will demand execution. The pressure is on Marc Benioff and his team not just to sell the future—but to deliver it.
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