Salesforce Stock Downgraded as Analysts Question AI Strategy and Core Business Focus
NEW YORK — In a move sending shockwaves through Wall Street, DA Davidson has downgraded Salesforce (NYSE: CRM) from ‘Neutral’ to ‘Underperform’, raising serious concerns about the company’s intensifying focus on artificial intelligence (AI) at the possible expense of its foundational business operations.
The downgrade, accompanied by a reduction in the price target from $250 to $200, suggests that Salesforce’s high-stakes gamble on AI may be misfiring. Analysts warn that the shift could distract from its core revenue-generating services, and recent acquisitions like Slack and Tableau are under the spotlight for how well they integrate into this evolving strategy.
Is Salesforce Losing Its Focus? Analysts Sound the Alarm
AI Pivot Raises Red Flags for Investors
DA Davidson’s report casts doubt on Salesforce’s flagship AI initiative, Agentforce, which, while ambitious, may be premature. Analysts believe too many resources are being diverted away from the company’s legacy customer relationship management operations, which have long been the backbone of its global success.
Despite Salesforce boasting a $900 million annual revenue run rate from AI and data products, much of this appears to be driven by bundled pricing strategies, not by strong organic demand. The warning signs have prompted some to question whether the company’s aggressive AI roadmap is built on shaky ground.
“The fundamentals appear to be getting diluted,” one analyst noted. “AI may be the future, but it shouldn’t come at the cost of present-day stability.”
Financial Outlook Signals Slowing Momentum
DA Davidson forecasts a modest revenue increase of just 5.5% for fiscal year 2026, significantly below the market consensus of 7.5%. This cautious projection underscores investor fears that Salesforce’s AI enthusiasm might not deliver immediate or sustainable growth, especially with mounting competition in the enterprise software sector.
Acquisitions Under Scrutiny
Salesforce’s acquisitions of Slack, Tableau, and Mulesoft are being re-evaluated under this lens. While these tools were expected to expand Salesforce’s digital ecosystem, there is growing concern that their integration has been inconsistent, and they are yet to yield significant standalone gains.
CRM Stock: A Cooling Market Reaction
Salesforce stock has experienced a steady decline since late March, when it traded at $285.51. As of mid-morning on April 21, 2025, the stock had dipped to $235.30, down from its previous close of $247.26.
Despite a 52-week high of $369.00, the current trajectory reflects investor hesitation. Financial indicators like a trailing P/E ratio of 37.05 and a forward P/E ratio of 21.14 suggest the market is uncertain about Salesforce’s earnings outlook.
With a market cap of $226.12 billion, Salesforce remains a heavyweight, but this recent downgrade serves as a stark reminder that even tech giants must balance innovation with operational discipline.
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