Bank of America has resumed coverage of Salesforce.com (CRM.US), assigning an "Underperform" rating with a $160 price target. The bank's analysts argue that the company's artificial intelligence (AI) transformation is driving a "structural reset."
Led by analyst Tal Liani, the team acknowledges Salesforce.com's established platform foundation. However, they anticipate the AI shift will prompt a structural realignment, highlighting three core challenges: weak growth in new customer acquisition, limited potential for upselling, and a slower-than-expected path to AI monetization.
The analysts posit that Salesforce.com is evolving from a historically high-growth platform company into a mature cash-flow generating business. Consequently, they forecast the company will enter a phase of structurally lower growth, with annual growth rates around 10%.
The analysis indicates that AI is fundamentally altering Salesforce.com's long-term growth trajectory. While the company's "Agentforce" strategic direction is deemed correct, the analysts note challenges with the product itself and its limited current impact. In the most recent quarter, Agentforce contributed less than 2% of total revenue, and over 60% of bookings came from expansions within the existing customer base, not new clients.
The team further adds that AI-driven automation of front-office functions, coupled with corporate efforts to optimize user seat counts, is constraining upselling opportunities.
"Therefore, we view Salesforce.com as evolving into a saturated yet critical system of record, rather than a platform capable of consistently monetizing incremental growth," stated Tal Liani and his team. "AI is introducing heightened competitive risks. AI-powered workflow automation is turning 'workflow stickiness' into an abstraction layer that new competitors can uniformly target."
They point out that hyperscale cloud providers like Google are introducing workflow automation features. Competitive dynamics are intensifying as Salesforce.com and ServiceNow encroach on each other's domains, Shopify competes in e-commerce, Adobe applies pressure in marketing, and new entrants target both customer-facing and internal workflow markets. Although these players typically focus on different segments, the overall result is increased business overlap, which could pressure growth and pricing power.
The analysts project Salesforce.com's revenue growth for fiscal years 2027 and 2028 at 11.1% and 9.6%, respectively, with operating margins stabilizing between 34% and 35%.
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