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Salesforce (NYSE: CRM) has faced a 20% year-to-date decline, significantly underperforming the S&P 500, which is up 4%. This downturn is driven by rising concerns over slowing growth and competition in AI. However, over a broader timeline, Salesforce’s stock has doubled since early 2023, propelled by a 46% revenue growth from $26.5 billion in 2022 to $38.6 billion, a 39% increase in Price-to-Sales (P/S) ratio from 4.9x to 6.7x, and a 0.4% decrease in total shares outstanding, aided by approximately $22 billion in share buybacks since 2022.
Key growth factors include the company’s push into AI, evidenced by over 8,000 deals closed on the Agentforce platform and a nearly 120% year-over-year growth in the Data Cloud segment, now generating $900 million in annual recurring revenue. Salesforce’s price-to-sales ratio has increased by 39% due to its AI transformation strategy and pricing power. The company’s operating margin expanded significantly from 2.1% in 2022 to 20.5% currently, with a future share valuation estimated at $360, reflecting a 30% upside potential from its current price near $270.
Despite a positive outlook, Salesforce faces risks including past stock declines during market downturns, intensified competition—especially from Microsoft—and potential challenges in customer adoption of AI services. These risks highlight the need for careful investment monitoring.
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