Salesforce Inc. (NYSE:CRM) shares advanced 1.9% to $184.98 during Wednesday morning trading, extending Tuesday's 4.55% gain. The rally narrows the gap between the stock price and analyst valuation estimates, which have been revised lower.
On July 27, a valuation model from Simply Wall St reduced its price target for Salesforce by 2.63% to $241.72, implying a 30.7% upside from current levels. However, other estimates vary significantly. A 24/7 Wall St. projection for 2026 sits at $192.00, just 3.8% above the market, while their 2027 forecast of $245.23 suggests a 32.6% potential gain. The stock has already risen 17.5% from the $157.47 level cited in that analysis, compressing the implied upside from 55.7%.
Agentforce, Salesforce's agentic AI platform, reported annual recurring revenue (ARR) of $1.2 billion, a 205% year-over-year increase. This run rate represents approximately 2.6% of Salesforce's projected fiscal 2027 revenue midpoint of $45.9 billion to $46.2 billion. Despite triple-digit growth in Agentforce ARR, overall group revenue is not expanding at the same pace.
Capital returns are a major driver of per-share earnings growth. Salesforce repurchased $27.1 billion worth of stock in the first quarter, an amount 22.6 times Agentforce's ARR. These buybacks accounted for 16.8% of Wednesday's $161.2 billion market capitalization. The company financed a $25 billion accelerated share repurchase program through debt issuance.
The aggressive buyback has reduced diluted shares outstanding by 10.2% to 871 million, from 970 million. Revenue grew 13%, while GAAP diluted earnings per share surged 52%, with the share count decline amplifying the difference. Strategic investments added $0.49 to diluted EPS in the quarter, compared to a $0.05 drag a year earlier.
CEO Marc Benioff described agentic AI as "the biggest growth opportunity for our customers, and for Salesforce." President Robin Washington predicted an acceleration of organic revenue growth in the second half of the fiscal year. The full-year outlook calls for 11% revenue growth, with Informatica contributing roughly three percentage points. In the second quarter, the Informatica acquisition is expected to add just over four percentage points.
Risks include the possibility that Agentforce revenue growth may lag behind user expansion, higher interest expenses from debt-financed buybacks, and integration challenges from the proposed $3.6 billion acquisition of Fin. The 2026 target from 24/7 Wall St. is only 3.8% above the current price, making the bullish case heavily dependent on 2027 performance.
