Even as Salesforce.com (CRM) CEO Marc Benioff strengthens his ties with the Trump administration, it has failed to halt the persistent slide in the software giant's stock price.
Year-to-date, Salesforce stock has fallen approximately 10%, as market concerns that AI tools like OpenAI's ChatGPT could disrupt software companies continue to weigh on investor sentiment. The stock is the worst-performing component of the Dow Jones Industrial Average (^DJI) so far this year.
In 2025, Salesforce shares plummeted 24%, while its long-time rival Microsoft (MSFT) saw its stock rise 14%, and the tech-heavy Nasdaq Composite Index (^IXIC) gained 20% for the full year.
JPMorgan analyst Mark Murphy warned in a recent note to clients: "We have consistently emphasized that Salesforce is in a complex 12- to 18-month transition period. While internal operational conditions appear to be stabilizing and improving, this may not necessarily translate into substantial, linear growth in the core metrics investors focus on, such as revenue and current remaining performance obligation."
Murphy suggested that a rebound in Salesforce's stock price is unlikely to begin until the second half of this year.
Salesforce has been proactively taking measures in an attempt to boost its stock price.
At its Dreamforce global conference last September, Salesforce tried to allay market fears by showcasing use cases for its AI agent product, Agentforce, which has already helped companies like PepsiCo and Dell improve operational efficiency.
In December of the same year, Salesforce raised its revenue and adjusted profit forecasts for fiscal year 2026.
In the third quarter of fiscal 2026, Agentforce's annual recurring revenue surpassed $500 million, growing more than threefold compared to the prior year.
Concurrently, Benioff spent part of 2025 deepening his relationship with President Trump (Salesforce has significant business dealings with the U.S. government). Last September, Benioff attended a state dinner for Trump hosted by King Charles in the UK, alongside several other corporate executives.
Just before the Dreamforce conference opened, Benioff told The New York Times that the National Guard should be deployed in San Francisco. This surprising remark drew dissatisfaction from many executives. Although Benioff later partially walked back the statement, it was still widely viewed as a signal of support for Trump.
Despite these efforts, the road ahead for Salesforce's stock appears to remain challenging.
Unless Salesforce can demonstrate that its Agentforce product is indeed generating substantial revenue and has the capability to achieve its ambitious performance targets set for fiscal 2030, even a discounted stock price may struggle to attract investors. Furthermore, the company needs to strengthen its cost controls further.
Artificial intelligence is profoundly reshaping the future landscape of the software industry and Wall Street's valuation logic for software stocks. From a valuation perspective, the entire software sector has been repriced, making it significantly more challenging for companies to meet optimistic performance guidance.
"If ChatGPT can handle these tasks, why do we need software companies?" This is the prevailing sentiment on Wall Street, a view that puts pressure not only on Salesforce but also on companies like Adobe (ADBE).
Of course, Benioff and Salesforce still have their supporters; there are always two sides to any trade.
"Salesforce is a very strong company. I believe they will be a beneficiary of the AI wave, and the company has consistently focused on improving profit margins," said Jeff Smith, CEO of Starboard Value, at the Yahoo Finance Invest conference.
Three years ago, the activist investment firm Starboard Value was one of the first investors to publicly urge Salesforce to adjust its business strategy. At the time, its activist campaign primarily focused on pushing Benioff to halt costly acquisitions, which had persistently dragged on the company's profit margins. Salesforce initially heeded this advice but resumed its acquisition strategy last May with the $8 billion purchase of Informatica. Interestingly, since Salesforce announced this deal on May 27, 2025, its stock has declined 13%.
According to 13F filings, Starboard still holds a small position in Salesforce.
Smith added, "Since our engagement, the company's operational performance has improved significantly. However, the price-to-earnings ratio has declined. So the issue isn't the company's execution, but rather the pressure on the entire software sector, particularly value software companies – those that aren't growing at 20%. Salesforce is still growing at a double-digit rate; it just hasn't met some investors' expectations. Therefore, we remain very positive on the company, view it as an excellent holding, and believe it will perform exceptionally well in the future."
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