--- title: "Despite the rebound in software stocks, Salesforce still lags behind. Can the earnings report alleviate AI concerns?" type: "News" locale: "en" url: "https://longbridge.com/en/news/287765923.md" description: "As U.S. software stocks rebound, Salesforce has yet to emerge from its difficulties, with a year-to-date decline of 32%. Concerns in the market about its core CRM business facing AI competition have intensified. The earnings report set to be released on Wednesday could be a key catalyst, although analysts believe its business stickiness is underestimated, the outlook remains in question" datetime: "2026-05-27T12:09:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/287765923.md) - [en](https://longbridge.com/en/news/287765923.md) - [zh-HK](https://longbridge.com/zh-HK/news/287765923.md) --- # Despite the rebound in software stocks, Salesforce still lags behind. Can the earnings report alleviate AI concerns? According to Zhitong Finance APP, as software stocks in the US rebound from the AI panic sell-off earlier this year, Salesforce (CRM.US) has failed to truly emerge from the mire. Concerns about its core CRM business facing competitive pressure from AI have caused the stock to significantly lag behind its peers. However, the earnings report set to be released after the market closes on Wednesday may serve as a key catalyst to break the deadlock. ## Stock Price Severely Underperforms: Down 30% Year-to-Date, Valuation at Rock Bottom Since hitting a three-year low on April 10, Salesforce has risen 8.6% cumulatively, but it has still recorded a 32% decline year-to-date. Its performance is far inferior to the iShares Expanded Tech-Software Sector ETF, which has rebounded 26% since hitting a recent low on April 10, with its year-to-date decline narrowing to 11%. Both have been far outpaced by the tech-heavy Nasdaq 100 index, which has risen 19% so far in 2026, primarily driven by a strong surge in chip stocks. "It has gone through a very painful period, but the stickiness of the business and its essential-like attributes have been underestimated, even though revenue continues to grow at a considerable pace," said Brian Kersmanc, portfolio manager at GQG Partners, which holds Salesforce shares. "After this significant clearing, I believe we will start to see its advantages emerge." Software stocks are regaining vitality as encouraging corporate earnings reports indicate that AI may not completely destroy growth as investors initially assumed, and in some cases, it may even become a tailwind. Coupled with valuations that have fallen to rock bottom, Wall Street believes that the earlier industry-wide weakness may have been somewhat excessive. However, Salesforce has not captured much of the rebound, and its outlook remains in question. Wall Street's main concern stems from competition from Anthropic and OpenAI, which could weaken the pricing power and demand for its customer relationship management software that has driven strong growth for years with high profit margins. ## Is AI Competition a "Real Threat" or "Overblown Concern"? Bank of America reinitiated coverage on Salesforce last week, giving it an "underperform" rating due to its "structural growth slowdown" and greater competitive risks from AI. Bank of America analyst Tal Liani wrote in a report, "Salesforce remains a deeply embedded platform, but we expect the AI transformation to bring about a structural reset, raising three core concerns: weak net new customer additions, limited upsell potential, and disappointing AI monetization pathways. The company is transitioning from a historically high-growth platform to a mature cash generator." At least for now, the anticipated impact of AI is more evident in the market sentiment surrounding Salesforce than in its actual fundamentals. According to compiled data, the company is expected to achieve 11% revenue growth in fiscal year 2027 (ending January next year), up from 9.6% in fiscal year 2026. Meanwhile, the stock's valuation is near historical lows, with a price-to-earnings ratio of only 13 times, far below its 10-year average of 45 times. Salesforce's price-to-earnings ratio hit a historical low two weeks ago and has been below 30 times for over a year Brian Kersmanc, portfolio manager at GQG Partners, stated, "Considering all the legal, compliance, and operational issues, it is extremely difficult for companies to switch CRM vendors, so I don't think there is much credibility to the claim that Salesforce will be 'atmospherically programmed' out" (where "atmospheric programming" refers to users writing code with the help of AI, which is seen as a significant risk for software manufacturers). "As people gradually realize it hasn't been disrupted, I believe its valuation will be revised upward. Double-digit growth paired with a multiple in the teens looks very attractive." He is not alone in this view. Among the 62 analysts tracking Salesforce, 47 have given it a "buy" rating, with an average target price of $253, implying a potential 41% increase in the stock over the next 12 months. According to compiled data, this is one of the stocks with the highest implied return in the S&P 500 technology sector. ## Overall Strong Earnings Season for Software Stocks, Can Salesforce Keep Up? Software companies have performed strongly this earnings season, with about 87% of companies exceeding earnings and revenue expectations, outperforming the overall S&P 500. In the previous earnings season, only 71% of software companies had revenue that exceeded expectations. Meanwhile, the recent surge in storage chip stocks also indirectly confirms the continued high demand for AI infrastructure investments. SK Hynix and Micron Technology have both seen their market values surpass $1 trillion, as investors bet that the AI boom will trigger a long-term revaluation of the semiconductor industry. Whether this structural dividend will spill over to the enterprise software layer is key to whether companies like Salesforce can leverage this momentum for transformation. For Salesforce, the question remains whether its products will be replaced by AI. Stephen Bersey, head of technology research at HSBC, does not share this pessimistic view, mainly because a significant portion of the value of the company's sales comes from proprietary data and the depth of integration of these programs within its client enterprises. He noted that Oracle (ORCL.US), Microsoft (MSFT.US), and ServiceNow (NOW.US) are also in the same position, unlike those selling more niche applications like development tools or photo editing, which are more susceptible to disruption by AI. "AI represents one of the most significant monetization opportunities I've seen in the software industry over the past few decades," he said. "Ironically, as we stand on the brink of an AI-driven golden age for software, market sentiment towards this industry has reached unprecedented levels of pessimism." ### Related Stocks - [CRM.US](https://longbridge.com/en/quote/CRM.US.md) - [CRMG.US](https://longbridge.com/en/quote/CRMG.US.md) - [IGV.US](https://longbridge.com/en/quote/IGV.US.md) - [.NDX.US](https://longbridge.com/en/quote/.NDX.US.md) - [OpenAI.NA](https://longbridge.com/en/quote/OpenAI.NA.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [MU.US](https://longbridge.com/en/quote/MU.US.md) - [HSBA.UK](https://longbridge.com/en/quote/HSBA.UK.md) - [HSBC.US](https://longbridge.com/en/quote/HSBC.US.md) - [ORCL.US](https://longbridge.com/en/quote/ORCL.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [NOW.US](https://longbridge.com/en/quote/NOW.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) - [DTIW.SG](https://longbridge.com/en/quote/DTIW.SG.md) - [00005.HK](https://longbridge.com/en/quote/00005.HK.md) - [ORCL-D.US](https://longbridge.com/en/quote/ORCL-D.US.md) ## Related News & Research - [Salesforce (CRM) targets 44% surge as AI agents gain ground](https://longbridge.com/en/news/287658928.md) - [Salesforce earnings, revenue beat. 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