Is It Time to Buy Salesforce Stock With AI Agent Momentum Mounting?
Key Points
Salesforce is starting to see solid AI agent traction with its Agentforce platform.
However, this hasn't yet led to a meaningful acceleration in its overall revenue growth.
The stock's valuation is cheap, trading at a forward price-to-sales multiple of 5.3.
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Salesforce (NYSE: CRM) turned in solid fiscal 2026 third-quarter results and issued upbeat guidance on the back of the strong momentum it is seeing with its artificial intelligence (AI) agent platform, Agentforce, helping send its stock higher. However, the stock has still lost a quarter of its value this year, as investors remain cautious on the impact that AI will have on software-as-a-service (SaaS) companies, which tend to price their solutions on a per-user basis.
Let's take a closer look at its results and prospects to see if now is the time to jump into the stock.
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Agentic AI momentum
Agentforce helped drive Salesforce's growth this quarter, with the AI agent platform seeing its annual recurring revenue (ARR) surge 330% to $540 million. Meanwhile, Agentforce was included in six of its top 10 deals in the quarter. It said it currently has 9,500 paid Agentforce deals, which is up 50% from just last quarter. Meanwhile, its has more than 18,500 Agentforce deals in total. It noted that its flexible pricing options, which can be seat- or usage-based, have helped drive AI agent adoption.
Data 360 (formerly Data Cloud), which helps customers unify their data into a single source, has been another growth driver. The number of records the platform collected and processed more than doubled in the quarter. Combined Agentforce and Data 360 ARR jumped 114% year over year to $1.4 billion.
Overall, Salesforce's revenue rose by 9% year over year to $10.26 billion, which was in the middle of its guidance range of $10.24 billion to $10.29 billion and just missed the $10.27 billion consensus, as compiled by LSEG. Subscription and support revenue increased by 10% to $9.73 billion.
Platform sales, where Agentforce and Data 360 reside, led the way, with growth accelerating to 19% in the quarter, up from 14% growth in Q1 and 16% in Q2. Marketing and commerce growth was its weakest area, with growth edging up just 1%.
Image source: Getty Images.
Among its other core products that came from prior big acquisitions, Slack led the way with revenue growth of 13%. Tableau revenue rose by 4%, while Mulesoft revenue increased by 6%. That was a meaningful deceleration for both Mulesoft and Tableau, which it blamed on the on-premise portion of their revenue, which gets recognized in the period it's booked, creating less visibility.
Adjusted earnings per share (EPS) soared 35% to $3.25, which came in well above the $2.86 consensus. The company also continues to produce a boatload of cash. Operating cash flow came in at $2.3 billion, while free cash flow was $2.2 billion. The company ended the quarter with $11.3 billion in cash and short-term investments and $8.4 billion in debt. It spent $3.8 billion repurchasing stock in the quarter.
Looking ahead, the company once again increased its full-year guidance, as shown below:
|
Metric |
Original Fiscal 2026 Guidance (Feb) |
Prior Fiscal 2026 Guidance (May) |
Prior Fiscal 2026 Guidance (Sept) |
Current Fiscal 2026 Guidance |
|---|---|---|---|---|
|
Revenue (in billions) |
$40.5 to $40.9 |
$41.0 to $41.3 |
$41.1 to $41.3 |
$41.45 to $41.55 |
|
Revenue growth |
7% to 8% |
8% to 9% |
8.5% to 9% |
9% to10% |
|
Adjusted EPS |
$11.09 to $11.17 |
$11.27 to $11.33 |
$11.33 to $11.37 |
$11.75 to $11.77 |
Data source: Salesforce.
For fiscal Q4, the company forecast revenue to increase by 11% to 12% (10% to 11% organically) to between $11.13 billion and $11.23 billion. It is projecting adjusted EPS in a range of $3.02 to $3.04. Analysts were looking for adjusted EPS of $3.04 on revenue of $10.9 billion.
Is it time to buy the stock?
One of the most attractive things about Salesforce is its valuation. Based on next year's fiscal 2027 analyst estimates, it now trades at a forward price-to-sales multiple of 5.3, a forward price-to-earnings (P/E) ratio of 19.5, and a price/earnings-to-growth (PEG) ratio of below 0.55. A positive PEG ratio below 1 is typically indicative of an undervalued stock.
Salesforce is starting to see momentum build with Agentforce, although that has still not translated into a meaningful acceleration in its overall revenue growth. It's still stuck being a high-single-digit, low-teens revenue grower. That's not a bad thing, and combined with its value, it's an attractive GARP (growth at a reasonable price) stock to own. Meanwhile, the AI agent market is still in its infancy, so the opportunity for Agentforce to help accelerate growth later down the line remains.
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Geoffrey Seiler has positions in Salesforce. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.
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