Salesforce Delivers Uninspiring Quarter But Signals AI Driven Upside Ahead, Says Analyst

Core Insights - Salesforce Inc. reported stronger-than-expected fiscal second-quarter results, with revenue reaching $10.2 billion and earnings per share at $2.91, but issued a cautious revenue and earnings guidance for the third quarter that fell below Wall Street forecasts [1][3] - The company experienced an 11% growth in current remaining performance obligations (cRPO), driven by contributions from Sales and Service Cloud and a significant increase in Agentforce customers [2][8] - Despite the quarterly performance, management maintained its fiscal 2026 revenue guidance at $41.1–$41.3 billion and EPS at $11.33–$11.37, indicating a cautious growth outlook [3] Financial Performance - Revenue for the quarter was $10.2 billion, exceeding consensus estimates, while annual recurring revenue from Data Cloud and AI products reached $1.2 billion [1][2] - Operating margins were reported at 34.3%, with a constant-currency revenue growth of 9% [5] - The company expanded its share repurchase program by $20 billion, reflecting a commitment to capital returns [3] Analyst Ratings and Insights - Needham analyst Scott Berg reiterated a Buy rating with a price target of $400, noting a 20% year-over-year increase in sales headcount as a potential future growth driver [4] - Canaccord Genuity's David Hynes maintained a Buy rating but reduced his price target from $350 to $300, describing the quarter as "steady, not spectacular" [5] - KeyBanc's Jackson Ader reiterated an Overweight rating while lowering his price target from $440 to $400, highlighting strong subscription growth and the upcoming Dreamforce event as a potential catalyst [6] Growth Drivers - Salesforce's Data Cloud and Agentforce saw a robust 120% year-over-year growth in annual recurring revenue, with a 50% sequential growth in paid users for Agentforce [5][6] - The number of enterprises piloting Agentforce increased significantly from 20 to 120, with a 60% quarter-over-quarter conversion rate [8] - Analysts anticipate an AI-driven acceleration in sales, with Bank of America Securities' Brad Sills maintaining a Buy rating and a price target of $325 [7][8]