Why Salesforce Stock Skyrocketed 40% Last Month

Salesforce (NYSE: CRM) stock surged in August. The company's share price rocketed higher by 40% across the period amid a 2.6% gain for the S&P 500 and a 3.9% gain for the Nasdaq Composite.

Last month was generally a strong one for companies with positive exposure to artificial intelligence (AI) trends, and Salesforce's quarterly report finally helped investors see it as part of that category. Despite the huge rally, the stock is still down roughly 2% in 2026.

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The market loved Salesforce's quarterly report

On Aug. 26, Salesforce published results for the second quarter of its 2027 fiscal year -- which ended July 31. The customer relationship management (CRM) software specialist recorded non-GAAP (adjusted) earnings of $5.90 per share on sales of $11.35 billion, exceeding the average analyst estimate of $3.27 per share on sales of $11.32 billion. Revenue for the quarter was up roughly 11% year over year.

While growth for the value of its investment in Anthropic played a big role in Salesforce's huge earnings beat in fiscal Q2 and net income rising 87% year over year to reach $3.53 billion, the business's free cash flow (FCF) also rose 81% and reached $1.1 billion. For comparison, the average analyst estimate had only targeted FCF of roughly $643 million for the quarter.

What's next for Salesforce?

With its fiscal Q2 report, Salesforce announced that it now expects full-year sales to be between $46.1 billion and $46.4 billion for the year -- up from its previous guidance for sales between $45.9 billion and $46.2 billion. The average analyst estimate had targeted $46.1 billion in sales for the year.

Salesforce attributed $100 million of the guidance raise to organic growth and $200 million to its acquisitions of Contentful and Fin -- which are expected to close in the very near future. On the other hand, management noted a roughly $100 million foreign exchange headwind on a constant currency basis. Full-year revenue is projected to be between 11% and 12% -- or 11% on a constant-currency basis. The company also raised its adjusted earnings guidance for the year to between $16.67 per share and $16.71 per share -- up from previous guidance for per-share earnings between $14.06 and $14.12.

In addition to the beat-and-raise content of the company's fiscal Q2 release, the update also delivered information that helped assuage investor concerns that the business was on track to be disrupted by AI. Salesforce paired its quarterly report with the announcement of a plugin for Anthropic's Claude, built to help salespeople manage and automate data inputs, records, and communications with clients. The CRM specialist's own AI-powered offerings appear to be performing well, and the internal integration of artificial intelligence technologies also seems to be driving efficiency improvements.

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.