salesforce(US:CRM) ZACKS·2025-12-10 13:41Core Insights - Salesforce, Inc. (CRM) reported strong third-quarter fiscal 2026 results, with shares rising 9.3% since the earnings release on December 3 [1] - Non-GAAP earnings per share (EPS) of $3.25 exceeded the Zacks Consensus Estimate by 14.04%, reflecting a year-over-year increase of 34.9% [2] - Revenues of $10.3 billion matched consensus expectations and grew 10% year over year [2] Financial Performance - The growth in revenue and EPS is attributed to Salesforce's effective go-to-market strategy and focus on customer success, alongside the integration of generative AI into its offerings [3] - AI-driven products, particularly Agentforce and Data Cloud, generated $1.4 billion in recurring revenues, marking a 114% year-over-year increase, with Agentforce alone contributing $540 million, up 330% year over year [6] - Salesforce's stock is currently trading at a forward 12-month P/E ratio of 20.98, lower than the industry average of 29.55, making it an attractive investment option [8][12] Market Trends - Global spending on generative AI is projected to reach $644 billion by 2025, indicating a 76.4% year-over-year increase, with enterprise software expected to grow by 93.9% to $37.16 billion [7] - Despite economic uncertainties, digital transformation remains a priority for businesses, ensuring continued demand for Salesforce's solutions [7] Challenges - Salesforce is experiencing a slowdown in sales growth, with revenue increases cooling to single digits, showing only an 8.7% year-over-year growth in the first nine months of fiscal 2026 [13] - Analysts project revenue growth of around 10% year over year for fiscal 2026 and 2027, indicating no significant improvements in the near future [14] - EPS growth is expected to decline to a CAGR of 15% over the next five years, down from 27.8% in the previous five years [15] Investor Sentiment - The slowdown in growth has negatively impacted investor sentiment, with Salesforce shares down 21.9% year to date, while the industry has seen an 11.5% increase [17] - Compared to competitors like Microsoft and Oracle, Salesforce's stock performance has lagged, with Microsoft and Oracle shares rising 34.3% and 16.6% year to date, respectively [17] Conclusion - Despite the challenges of slowing growth, Salesforce's leadership in the CRM market, focus on AI, strategic acquisitions, and attractive valuations suggest a hold position for long-term gains [20]