Salesforce Acquires Informatica for $8 Billion to Boost AI

Salesforce, Inc. (CRM) has announced an acquisition of data management firm Informatica Inc. (INFA) for approximately $8 billion. This all-cash deal aims to enhance Salesforce’s data management and AI integration capabilities. The closing is anticipated in early 2027, positioning Salesforce as a front-runner in enterprise AI.

Informatica’s Role in Enhancing Salesforce’s AI

Informatica is recognized for its robust data management tools. These include data integration, governance, and quality management that will strengthen Salesforce’s AI platform, Agentforce, and its Data Cloud product. Salesforce asserts that the acquisition will create a solid data foundation necessary for autonomous AI systems, which rely on accurate and well-managed data.

CEO Marc Benioff stated that this acquisition will generate the most comprehensive data platform for AI in the industry. The integration of Informatica’s capabilities with Salesforce’s existing software, such as MuleSoft and Tableau, aims to help customers leverage their data more effectively.

The acquisition is strategically sound, as Informatica will bolster Salesforce’s support for advanced AI features. This includes improved context and origin understanding for AI agents, which is essential for responsible AI-driven decision-making. Furthermore, these enhancements will also challenge competitors like SAP SE (SAP) and Microsoft Corporation (MSFT) in the enterprise software arena.

Salesforce’s Financial Outlook Post-Acquisition

Financially, the acquisition is structured effectively, funded through Salesforce’s cash and new debt. Salesforce expects the deal to contribute positively to non-GAAP earnings and free cash flow from the second year onwards. It is designed to support long-term profitability while adhering to Salesforce’s established financial discipline, focused on margin improvement and shareholder returns.

This move is crucial amid Salesforce’s slowing revenue growth. The company has reported a shift from double-digit to single-digit revenue growth in recent quarters, driven by cautious enterprise spending in the current economic climate. The Zacks Consensus Estimate reflects that this trend might continue, predicting mid-to-high single-digit growth for fiscal 2026 and 2027.

Investor sentiment has been impacted, reflected in Salesforce’s share price, which has declined 17.1% year to date (YTD), underperforming the Zacks Computer – Software industry that has gained 4.3% during the same period. In comparison, shares of SAP and Microsoft have increased by 21.9% and 9.2%, respectively.

Conclusion: Hold Salesforce Stock

The acquisition of Informatica supports Salesforce’s long-term vision for AI development, despite current stock pressures. Enhancing data infrastructure is critical for future AI innovation. Although recent revenue trends are subdued, this acquisition positions Salesforce for increased competitiveness. Therefore, maintaining CRM stock is advisable as investors should monitor future developments.

Salesforce is currently rated #3 (Hold) by Zacks.

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This article originally published by Zacks Investment Research.

The views expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.