Citi has lowered its price target for Salesforce.com (CRM.US) from $200 to $188 ahead of the company's Q1 FY2027 earnings report, maintaining a "Neutral" rating. The stock closed at $181.82 last Friday. This adjustment reflects a market shift from initial optimism about AI-driven growth to a more cautious reassessment of traditional SaaS business models in the face of potential disruption from AI, led by players like Anthropic.
Citi's analyst team reiterated their Neutral rating, stating: "We modestly lower our FY2027 estimates to the low end of guidance after field checks indicated elongated deal cycles and enhanced portfolio optimization at renewal, particularly for Tableau and Marketing Cloud. While Agentforce remains a driver in customer conversations, we have not observed significant signs of large-scale adoption. We expect Q1 results to be roughly in line with consensus and reaffirm the full-year FY2027 guidance range, though we anticipate organic cRPO growth guidance for Q2 to moderate slightly to 8-8.5% year-over-year on a constant currency basis. We have also modestly lowered some of our core FY2027 estimates to the low end or below the guidance range."
The analysts noted that despite Salesforce.com's AI products, such as Agentforce, featuring more prominently in customer discussions, widespread adoption and meaningful revenue contribution are not yet evident, leading investors to adopt a more cautious stance on future growth. The "AI disruption" theme is raising questions about whether traditional SaaS models can be genuinely reshaped by AI, a shift in perception that is affecting overall software sector valuations and risk appetite.
Citi slightly reduced its adjusted earnings per share (EPS) estimates for Salesforce.com: FY2027 from $13.18 to $13.11, FY2028 from $14.82 to $14.57, and FY2029 from $16.97 to $16.41. The analysts added: "We expect Q1 results to be generally in line with or slightly below the company's prior guidance and do not anticipate an increase to the full-year FY2027 target during the earnings call. Organic cRPO growth in Q1 is likely to meet expectations at approximately 9% CC year-over-year, while Q2 guidance may show a slight deceleration to 8-8.5%."
Salesforce.com is scheduled to report its Q1 FY2027 earnings after the market closes on Wednesday, May 27. Consensus estimates compiled by Seeking Alpha project adjusted EPS of $3.12 for the quarter, implying approximately 21% growth, GAAP EPS of $1.79, and revenue of about $11.06 billion, suggesting roughly 13% year-over-year growth.
Can AI truly "disrupt everything"? The soaring valuation of Anthropic reflects a broader repricing of the software application layer in the era of AI agents. The urgent need for improved efficiency and lower operational costs is driving widespread adoption of two core AI application categories: generative AI applications and AI agents. AI agents, capable of autonomously handling complex tasks, represent a major long-term trend, signifying AI's evolution from an informational aid to a highly intelligent productivity tool. This is a key reason behind Anthropic's valuation surge to $1 trillion, surpassing OpenAI.
The launch of Anthropic's AI agent tools was a significant catalyst for the panic selling in software stocks that began in February. More accurately, it was not Anthropic alone "disrupting the entire software sector," but its Claude agent tool that made the market suddenly realize: large model companies are fundamentally disrupting the enterprise application layer, potentially encroaching on the profit pools of traditional SaaS companies focused on legal, sales, marketing, data analysis, low-code editing, and other specialized areas.
Salesforce.com's stock decline of nearly 40% year-to-date reflects the "higher growth proof threshold for traditional software/internet operations companies in the AI era." The pessimistic "AI disruption" tone since February stems from growing market concerns that viral AI agent workflows, like Claude Cowork and OpenClaw, could undermine the entire software empire built on SaaS seat-based subscription revenue models. This led to a rare sell-off in software stocks in February, which subsequently spread to cybersecurity, online education, traditional finance, insurance, real estate, transportation systems, and other industries perceived as reliant on seat-based or labor-intensive business models—all seen as vulnerable to AI disruption.
Following the HumanX Global AI Conference in San Francisco, analysts from UBS noted that leading AI application pioneers, OpenAI and Anthropic, are transforming from AI model super-giants into "consumers" of corporate IT budgets. The UBS analysts wrote that the introduction of more capable AI models by frontier companies like Anthropic and OpenAI poses a significant threat to the growth prospects of most traditional software companies, as these AI leaders are increasingly capable of capturing a larger share of enterprise customer "wallet share"—the portion of a company's total IT/software/digital budget spent with a particular vendor.
According to UBS, enterprise IT budgets that would have traditionally gone to established software vendors are now being allocated in greater portions to frontier AI companies like OpenAI and Anthropic. Microsoft's early $13 billion investment in OpenAI and its internal robust return target of $92 billion, combined with Anthropic's explosive revenue trajectory, highlight an extremely optimistic commercialization path for AI agents and cutting-edge enterprise AI applications.
Anthropic announced last month that its annualized revenue run rate (ARR) has surpassed $30 billion, a significant increase from $9 billion at the end of 2025. A report by Semi Analysis in early May suggested Anthropic's ARR has risen to approximately $44 billion, a growth rate surpassing OpenAI's during the same period. According to the latest research from MarketsandMarkets, the AI agent market is projected to reach $53 billion by 2030, implying a compound annual growth rate (CAGR) of 46% starting from 2025.
Comments