Salesforce (CRM): A Bull Case Theory

We came across a bullish thesis on Salesforce on Summit Stocks's Substack. As of 1st July, Salesforce's share was trading at $272.69. CRM's trailing and forward P/E were 42.55 and 24.43 respectively according to Yahoo Finance.

Salesforce recently announced a 6% average list price increase across some of its core products, effective August 1, 2025, following a 9% hike in 2023. The price increase applies to products such as Agentforce, Customer360 Apps, and Slack. Agentforce, a suite of AI features, will be offered in two tiers, with prices starting at $125 per user per month for add-ons and $550 per user per month for Agentforce 1 Editions. The company also raised list prices for its Enterprise and Unlimited Editions for Sales Cloud, Service Cloud, Field Service, and select Industries Clouds. This move has raised questions about Salesforce's pricing power and whether it can maintain its customer base without significant churn.

The article examines whether Salesforce truly has pricing power, defined by five sources: differentiation, substitutes, switching costs, willingness to pay, and brand & behavior. While Salesforce has limited substitutes at the enterprise level, high switching costs, and continuous innovation, its core product is no longer unique, and competitors like Microsoft Dynamics offer similar capabilities. The company's attrition rate remains around 8%, and the 2023 price hike did not impact this figure. However, the next price increase will be a test of customers' willingness to pay. Salesforce's brand strength is significant in enterprise IT, but it does not necessarily translate to real pricing power.

The price increase does not directly translate to a 6% revenue growth, as actual pricing depends on bundling, discounting, and negotiation. The move may indicate that Salesforce is confident in its ability to maintain customers despite the price hike. If successful, it could set a precedent for future price increases. However, if customers react negatively, it could impact growth. The company's guidance and customer reactions will be crucial in determining the impact of this price increase on Salesforce's stock and revenue growth.

Previously, we covered a bullish thesis on Salesforce by Sergey on June 6, 2025, which highlighted the company's potential as a backdoor play on AI energy infrastructure. The stock has appreciated, but details are not available.  This is not the case.  Summit Stocks shares a similar view on Salesforce, but emphasizes the company's pricing power and potential revenue growth following a recent 6% price increase across some of its core products. While the previous thesis focused on Salesforce's indirect AI play, the current analysis concentrates on its direct business performance and customer retention.

CRM isn't on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of CRM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.