A New Bear on Salesforce's Stock Casts Doubt on Its AI Efforts

Salesforce Inc. has often been considered a strong player in the artificial intelligence (AI) sector, but a recent analysis suggests that optimism surrounding its AI capabilities might be misplaced. Guggenheim analyst John DiFucci has downgraded Salesforce’s stock rating from neutral to sell, expressing skepticism about the company’s ability to capitalize meaningfully on its AI platform, Agentforce.

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Agentforce is Salesforce’s AI tool designed to help businesses develop AI-driven agents capable of performing various tasks. However, DiFucci questions the platform’s potential impact, stating, “We do not believe that [Salesforce] will meaningfully monetize Agentforce unless it acquires several assets that have been doing, over the past decade, what Agentforce aspires to do.” He argued that Salesforce’s core function as a “system of record” ensures its longevity in the industry but doesn’t provide an edge in AI solutions requiring dynamic, context-rich data, unlike the static data typically housed within customer relationship management (CRM) systems.

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DiFucci is concerned that as traditional software companies integrate AI features into their offerings, these capabilities might become standard rather than premium, making it difficult to monetize them effectively. He also pointed out that companies in the contact-center-as-a-service and revenue-optimization-software sectors have been advancing these capabilities for years, leaving Salesforce playing catch-up in a space where innovation is already well-established.

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“Salesforce has not been very organically innovative in quite some time, in our view,” DiFucci wrote. This perceived lack of innovation raises questions about the company’s ability to maintain a competitive advantage in the rapidly evolving AI landscape.

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The enthusiasm among software investors for generative AI’s impact on traditional applications could be overstated, DiFucci warned. He noted that the segment might be particularly vulnerable, with Salesforce not being an exception. This view diverges from the broader market sentiment, where many analysts remain optimistic about Salesforce’s prospects in the AI space.

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DiFucci also tempered expectations for Salesforce’s revenue growth in the coming years. While investors are debating whether the company can achieve 9% or 10% revenue growth in fiscal 2026, he believes the figure will likely fall between 5% and 7% if Agentforce fails to deliver as anticipated.

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Even under an optimistic scenario where Salesforce’s new annual contract value (ACV) grows more in the fiscal fourth quarter than it has throughout fiscal 2025, achieving 9.5% revenue growth in fiscal 2026 would require ACV expansion of 33%, according to DiFucci’s calculations. He argued that such a growth rate is improbable, noting, “The last time CRM grew New ACV by that magnitude was 2017.”

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DiFucci’s bearish stance stands out, as only two of the 55 analysts covering Salesforce shares hold similar views, according to FactSet data. The majority of analysts maintain a favorable outlook, with an average price target of $400.80—approximately 20% higher than the stock’s current levels. DiFucci, however, has not provided a specific price target for the stock.

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Salesforce shares have seen a strong rally, climbing 36% over the past four months. However, they were trading slightly lower in premarket action on Monday following DiFucci’s report.

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DiFucci’s critique highlights a broader debate about Salesforce’s position in the AI sector and its ability to sustain growth in an increasingly competitive market. While the company’s stock has enjoyed significant gains in recent months, questions remain about the long-term viability of its AI initiatives and its capacity to maintain its leadership in the enterprise software space.

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By raising doubts about Salesforce’s innovation and growth potential, DiFucci’s analysis provides a contrarian perspective in a market where many investors continue to view the company as a key beneficiary of the AI revolution. Whether Salesforce can overcome these challenges and meet high investor expectations will be a critical story to watch in the years ahead.

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