This Beaten-Down AI Stock Could Stage a Comeback in 2026

Despite the banner year 2025 was for artificial intelligence (AI) stocks, not every company in the industry had a great year. Some AI companies tumbled dramatically despite the sheer amount of media attention and investing fervor in the technology.

Some of them fell due to being over-hyped or having poor fundamentals, but there's a few for which I can't explain their poor performance. Salesforce (NYSE: CRM) is one of them.

The past 12 months have seen the company fall 33.7%, while the S&P 500 rose 16%. But given the company's strong fundamentals and the fact that it's up over 5,200% since its initial public offering (IPO) in 2004, I think 2025's dip was a speed bump and nothing more.

A sales force multiplier

Like Palantir, Salesforce is one of those companies people hear about but are often a little confused about what they actually do.

Salesforce is actually rather simply explained as a suite of software that makes business easier. From selling products more efficiently to managing customer relationships, Salesforce has a cloud and AI-enabled piece of software to help out.

In practice, it looks like FedEx capturing a 2,000% return on its investment in Salesforce because it helped the delivery company reactivate dormant accounts and send out 1 billion personalized emails annually. Or Formula 1 speeding up customer service responses 80% through the use of AI customer service reps.

Both are results cited by Salesforce as proof of its effectiveness and those two businesses aren't alone. Saks, OpenTable, Pandora, Lennar, and Pearson, among others, are also on Salesforce's website singing its praises.

Image source: Getty Images.

The reason Salesforce was down in 2025 seems to be primarily because even though it is growing its revenue at a fantastic pace (more on that shortly) it's not growing fast enough and missed Wall Street's growth expectations.

It's still fundamentally a very strong company, however, and worth a look on those fundamentals alone.

For the third quarter of 2025 (its most recently reported quarter), revenue climbed 9% year over year, it recorded a gross profit margin of 78% and an operating margin of 22%, and its operating cash flow grew 17%. Put simply, it's profitable, it's growing, and it has a long list of strong clients.

It has total debt of $11.6 billion to net cash of $7.2 billion, which isn't great, but it's far from the highest debt load out there and with Salesforce's growth, cash flow, and margins it's unlikely to be a problem.

If anything, the company's tumble in 2025 has put it into undervalued territory and primed it for a resurgence in 2026. At present, Salesforce's price-to-earnings ratio (P/E ratio) is 34.7, which is lower than Microsoft (which also offers business management software) at 36.8 and Oracle at 37.9.

With that in mind, 2025 looks like less of a decline and more of a correction, putting Salesforce in line with, and a little lower than, its big tech peers and primed for more growth now that its valuation is looking much more reasonable.

I'm of a mind that market pressures can't keep fundamentally strong companies down forever and Salesforce is a fundamentally strong company. This dog is ready to have its day and it likely will if it keeps growing like this.

James Hires has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lennar, Microsoft, Oracle, Palantir Technologies, and Salesforce. The Motley Fool recommends FedEx and Pearson Plc. The Motley Fool has a disclosure policy.