Salesforce Stock Has Substantial Upside, Says Mizuho's Moskowitz

Core Viewpoint - Salesforce is experiencing a significant decline in stock value due to a soft outlook, raising investor concerns in the software sector, despite the potential for organic revenue reacceleration and a commitment to profitable growth [2][5]. Group 1: Company Performance and Outlook - Salesforce announced a major buyback authorization of $50 billion, indicating confidence in the intrinsic value of its stock, although this has not yet restored investor confidence [5][6]. - The company expects to see accelerating growth in the second half of the fiscal year, particularly in Q3 of fiscal 2027, which is three quarters away [8]. - Salesforce's productive sales representatives have increased by 15% year over year, compared to flat growth a year ago, suggesting a positive trend in investment behind growth [9]. Group 2: Revenue Drivers and Challenges - The "agent force" software, which includes autonomous agents for various business processes, has shown significant growth, increasing from $540 million to $800 million in annualized recurring revenue [10][11]. - The company faces challenges in its marketing and commerce segments, which are expected to continue decelerating, posing a risk to overall growth [14]. - Current remaining performance obligations (CRPO) grew by 13% on a constant currency basis, with a year-over-year growth of 30%, reflecting a mixed quarter performance [15][16]. Group 3: Market Sentiment and Analyst Perspectives - The prevailing narrative in the market is that AI will disrupt many software companies, contributing to decelerating growth, which is currently affecting Salesforce [6][7]. - Despite lowering the price target from $280 to $265, analysts remain optimistic about the potential for accelerating growth in 2026, indicating substantial upside potential from current stock levels [15][16].