Is It Time to Buy Beaten-Down Salesforce?

In another sign that the software stocks may have bottomed, Salesforce (NYSE: CRM) shares rose despite the midpoint of the company's fiscal 2027 revenue guidance coming in slightly below expectations. The company's stock has been pummeled this year, down around 25%, having been dragged down by the software-as-a-service (SaaS) sell-off.

Let's take a close look at its results and prospects to see if the stock is a buy at these beaten-down levels.

Agentic AI momentum continues

While investors fear the impact that artificial intelligence (AI) will have on SaaS companies, like others in the space, Salesforce has leaned into the technology, especially with AI agents. Meanwhile, with its acquisition of Informatica, the company is really trying to position itself as a main system of record from which to launch AI agents through its Agentforce platform.

Agentforce helped drive the company's growth in the quarter, with the AI agent platform seeing its annual recurring revenue (ARR) surge 169% to $800 million. Agentforce and Data 360 ARR, including Informatica Cloud, meanwhile, soared 200% to $2.9 billion. It said all 10 of its top deals included Agentforce, while Informatica was included in six of the top 10.

Overall, Salesforce's revenue increased by 12% year over year to $11.2 billion, which was in the middle of its guidance range of $11.13 billion to $12.23 billion and was just above the $11.18 billion consensus, as compiled by LSEG. Adjusted earnings per share (EPS) jumped 37% to $3.81, which easily beat the $3.04 consensus.

Subscription and support revenue increased by 11% in constant currencies to $10.68 billion. Platform sales, where Agentforce and Data 360 reside, led the way, with growth of 37% in the quarter. Marketing and commerce growth was its weakest area, with revenue falling 1%. Among its other core products that came from prior big acquisitions, Slack led the way with revenue growth of 12%. Both Tableau and Mulesoft saw revenue rise by 3%.

Looking ahead, the company guided for fiscal Q1 revenue of between $11.03 billion and $11.08 billion, representing growth of 12% to 13%. It projected adjusted EPS to be between $3.11 and $3.13. For the full year, it expects revenue to range from $45.8 billion to $46.2 billion, which equates to 10% to 11% growth. It expects adjusted EPS of between $13.11 and $13.19. Analysts were looking for full-year adjusted EPS of $13.12 on revenue of $46.06 billion.

Further out, Salesforce upped its revenue target for fiscal 2030 to $63 billion, which would be a compound annual growth rate of about 11%. It also authorized a $50 billion stock buyback.

Image source: Getty Images.

Is the stock a buy?

I think the combination of Informatica, Agent 360, and Agentforce set up Salesforce to be an agentic AI winner. Meanwhile, the company plans to aggressively buy back stock and sees steady revenue growth moving forward.

With the stock trading at a forward price-to-sales (P/S) ratio of 4 and a forward price-to-earnings (P/E) ratio of 15 based on current-year analyst estimates, I'd be scooping up the stock here. As the SaaS doomsday predictions start to fade away, Salesforce has the potential to solidly rebound from current levels.

Geoffrey Seiler has positions in Salesforce. The Motley Fool has positions in and recommends Salesforce. The Motley Fool recommends London Stock Exchange Group Plc. The Motley Fool has a disclosure policy.