This Remains One of the Most Underrated AI Stocks

Core Insights - Salesforce reported record third-quarter fiscal 2026 results, highlighting a strong AI strategy built on a profitable software platform [2][10] - The company’s revenue grew to $10.3 billion, a 9% increase year over year, with a non-GAAP operating margin of 35.5% [4][6] - Salesforce's AI products, particularly Agentforce and Data 360, generated nearly $1.4 billion in annual recurring revenue, reflecting a 114% year-over-year growth [7][8] Financial Performance - Salesforce's remaining performance obligations (RPOs) rose 11% year over year to $29.4 billion, indicating strong future sales demand [5] - Free cash flow increased by 22% to $2.2 billion, allowing the company to return $4.2 billion to shareholders through repurchases and dividends [6][10] - Full-year revenue guidance was raised to a range of $41.45 billion to $41.55 billion, implying a growth rate of 9% to 10% for the year [6] AI Growth Potential - AI-specific products are growing significantly faster than the overall company, with Agentforce revenue exceeding $500 million in annual recurring revenue after quadrupling [7][9] - The demand for AI tools has been a key driver in the growth of current RPOs, showcasing the integration of AI into the broader business strategy [9][10] Competitive Positioning - Compared to Palantir, Salesforce offers a more diversified business model with a lower price-to-sales ratio of less than 6 and a price-to-earnings ratio of 32 [12][17] - Salesforce's established software suite provides a strong foundation for AI initiatives, making it less dependent on speculative technology compared to Palantir [13][14] - The overall revenue growth for Salesforce has moderated to high-single-digit rates, but its AI-related revenue is still a growing segment within a larger business [16][17]