Salesforce shares are trading at their lowest valuation since the company’s IPO, but investors remain hesitant amid concerns that artificial intelligence could threaten its growth. The customer relationship management (CRM) software provider is scheduled to release its latest earnings report after trading hours. Salesforce forecasts double-digit revenue growth in the coming years.
Despite the low valuation, Wall Street analysts are not confident that the earnings report will significantly shift the cautious sentiment surrounding the stock. Hilary Frisch, a senior research analyst at ClearBridge Investments, stated that a change in investor sentiment hinges on stability and improved revenue growth. Year-to-date, Salesforce’s stock has fallen 30%, making it one of the worst performers in both the Dow Jones Industrial Average and the S&P 500 Index.
Meanwhile, shares of software companies perceived as AI beneficiaries, such as Microsoft, Oracle, and Palantir, are performing well. Salesforce’s current valuation is less than 19 times its estimated earnings over the next 12 months. This is significantly below its 10-year average of 47 and the S&P 500’s multiple of approximately 22.
Frisch believes the valuation presents an attractive opportunity for long-term investors if Salesforce’s forecast proves accurate. She anticipates stability and improvement over the next 12 to 18 months but cautions that this particular report may not be the catalyst for a turnaround, given persistent concerns about AI disruption.
