KeyBanc Capital Markets lowered its rating on Salesforce (CRM) on Thursday, sending shares down approximately 3.8% in premarket trading. The firm downgraded the enterprise software giant to “sector weight” from “overweight,” citing underwhelming traction for its flagship artificial intelligence product, Agentforce.
Analyst Jackson Ader said customer feedback reveals two persistent hurdles: many companies lack the necessary data readiness for meaningful AI deployment, and Agentforce itself “just isn’t there” as a product. The downgrade reflects a broader concern that Salesforce’s AI push may not deliver the growth acceleration investors had anticipated.
AI Strategy Under Scrutiny
Salesforce has positioned agentic AI—software capable of performing tasks with minimal human intervention—as a transformative growth driver. Chief Executive Marc Benioff called it the company’s “biggest growth opportunity.” However, KeyBanc’s analysis suggests the market may be overestimating the near-term impact.
Ader dismissed the notion that Salesforce shares are cheap, noting that while the stock may appear undervalued relative to historical levels, there is “little to no evidence” outside of valuation to support a bullish stance. The downgrade removed KeyBanc’s price target entirely.
Mixed Signals from Wall Street
The bearish call carries some timing risk. Guggenheim’s John DiFucci recently upgraded both Salesforce and ServiceNow, arguing that while AI poses a “major threat” to traditional software models, it is not a “death knell.” He contended that the recent selloff in enterprise software names has been overdone.
Salesforce itself points to solid operating metrics. In its fiscal first quarter, the company reported $11.1 billion in revenue, up 13% year-over-year. Management also revealed that Agentforce annual recurring revenue (ARR) reached $1.2 billion, with total AI and data ARR approaching $3.4 billion.
Defense and M&A Moves
Salesforce continues to expand its footprint beyond core CRM. On Wednesday, the company announced that the U.S. Air Force’s 441st Vehicle Support Chain Operations Squadron selected Missionforce National Security to manage a fleet valued at $13.5 billion, encompassing over 84,000 vehicles across nearly 389 sites. Kendall Collins, CEO of Missionforce and Government Cloud at Salesforce, said the program will provide “improved visibility for commanders.”
In June, Salesforce agreed to acquire Fin, formerly known as Intercom, for approximately $3.6 billion. The deal brings an AI-powered customer service agent platform that will integrate with Agentforce, reinforcing Salesforce’s commitment to AI-driven solutions.
Broader Sector Impact
The downgrade rippled across the enterprise software space, pressuring stocks such as ServiceNow and Workday. Some analysts have flagged the risk that AI agents could cannibalize demand for traditional software seats, a concern that has weighed on the sector.
KeyBanc noted that while partners have begun converting Agentforce proof-of-concept projects into deal pipelines, the pace remains insufficient to signal a sustained uptick. For Salesforce, the key metric investors are watching is revenue conversion, not just demonstration activity.
