Salesforce Plunges 20% in a Year: Is CRM Stock Still a Hold?

Salesforce, Inc.’s CRM shares have remained mostly in a downward trajectory over the past year. CRM stock has plunged 17.9% over the past year, underperforming the Zacks Computer – Software industry’s 10.7% gain.

Compared to key competitors like SAP SE SAP, Microsoft Corporation MSFT and Oracle Corporation ORCL, Salesforce’s slump appears even more pronounced. Over the past year, shares of Microsoft and Oracle have risen 14.1% and 23%, respectively. SAP shares have declined 4.2%.

Salesforce One-Year Price Return Performance

The sharp contrast raises a tough question: Is it time to move on from Salesforce, or is there still long-term value in holding on? While near-term issues are weighing on the stock, there’s still a strong fundamental case for staying invested.

Why Is Salesforce Stock Underperforming?

A decelerating growth trend has turned investors cautious about Salesforce’s near-term prospects. For years, it has delivered strong double-digit revenue increases. However, that pace has now cooled down to single digits. In the first nine months of fiscal 2026, revenues rose just 8.7% year over year.

This slowdown reflects cautious enterprise spending amid economic uncertainty and geopolitical pressures. Analysts’ revenue projections indicate no significant improvement in the years ahead. The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates growth of 9.5% and 11%, respectively, year over year.

The impact is also visible in profit forecasts. Salesforce’s earnings per share (EPS) is now expected to witness a CAGR of 15% over the next five years, which is a big drop from the 27.8% CAGR it posted over the previous five years. Fiscal 2026 and 2027 EPS forecasts indicate a year-over-year improvement of 15.3% and 10.4%, respectively.

This changing growth profile shows how businesses are adjusting their IT budgets. Instead of large digital transformation projects, many are opting for smaller, lower-risk investments. For Salesforce, this means it has to use strategies to stay competitive and relevant.

Nonetheless, Salesforce is now focusing on enhancing its portfolio in the enterprise software market and integrating artificial intelligence (AI) across its product lines, which could help it return to its robust growth trajectory.

Enterprise Software: A Key Catalyst for CRM’s Growth

Salesforce has long held the top position in the customer relationship management market, according to Gartner. The company’s vision now goes beyond customer management, and it is building a broader ecosystem focused on AI, data and collaboration. Acquisitions such as Waii, Bluebirds, Informatica, and Slack highlight Salesforce’s push to evolve into a more comprehensive enterprise platform.

AI is now central to Salesforce’s growth story. Since the 2023 rollout of Einstein GPT, Salesforce has been embedding generative AI across its offerings to help companies automate processes, improve decision-making and strengthen customer relationships.

Its latest innovation, Agentforce, is gaining momentum. Combined with Data Cloud, these AI-driven offerings brought in $1.4 billion in recurring revenues in the third quarter of fiscal 2026, representing a 114% year-over-year increase. Agentforce alone generated $540 million in recurring revenues, up 330% year over year. More than 50% of Agentforce deals came from existing clients, showing Salesforce’s success in cross-selling AI features to its user base.

Another tailwind is rising IT spending. Gartner estimates that worldwide IT spending will increase 9.8% year over year to $6.08 trillion in 2026. Software, a key segment for Salesforce, is expected to grow even faster, with a projected increase of 15.2% to $1.43 trillion. Even if economic conditions slow down spending in the short term, digital transformation remains a top priority for businesses, ensuring steady demand for Salesforce’s solutions.

Valuation: Salesforce Trades at Discounted Multiple

Salesforce stock looks attractive from a valuation perspective. CRM is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 20.16, significantly lower than the industry’s average of 28.47.

Salesforce Forward 12-Month P/E Ratio

Compared to major competitors like SAP, Microsoft and Oracle, Salesforce’s stock is cheaper on a P/E basis. At present, SAP, Microsoft and Oracle trade at P/E multiples of 29.8, 28.41 and 24.57, respectively.

Final Thoughts: Hold CRM Stock for Now

Salesforce’s slowing growth is real and has weighed on its stock price. However, its focus on expanding in the enterprise software space, AI integration, strategic acquisitions and reasonable valuations provides reasons to hold the stock for long-term gains.

Salesforce carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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