Zacks Investment Ideas feature highlights: Salesforce and Microsoft

For Immediate Release

Chicago, IL – May 23, 2025– Today, Zacks Investment Ideas feature highlights Salesforce CRM and Microsoft MSFT.

Buy This Megacap Tech Stock Down -2% Ahead of Earnings?

Salesforce stock has lagged solidly behind the Tech sector over the past five years. Wall Street is worried about CRM's slowing growth and the possible negative impact artificial intelligence could have on the entire cloud software industry.

The business software powerhouse is fighting back by investing heavily in AI efforts (Agentforce), boosting profitability, and paying dividends. Salesforce's earnings outlook has held up over the last year, and its valuation has improved significantly.

Investors might want to buy Salesforce stock down 20% from its highs heading into its Q1 fiscal 2026 earnings release on Wednesday, May 28.

The Bull Case for Salesforce Stock

Salesforce is a pioneer across business software, customer relationship management, and software-as-a-service.

CRM's growing portfolio supports sales, marketing, commerce, customer and client engagement, analytics, app development, and beyond. Companies big and small rely heavily on Salesforce's offerings that quickly become embedded into their businesses and are critical to day-to-day operations and beyond.

The business software power grew its revenue by an average of roughly 29% for 10 years between 2012 and 2022. Salesforce prolonged its impressive YoY growth through some major acquisitions. But its days of 25% to 30% YoY growth are over—its sales climbed 9% last year (fiscal 2025) and 11% in FY24.

Salesforce's transformation into a more mature growth technology company like Microsoft and others forced it to focus on the bottom line. It has trimmed costs through job cuts and other efficiency efforts to boost its earnings over the long haul.

Salesforce is returning value to shareholders via buybacks. Plus, CRM showcased its transition into a new era by declaring its first-ever dividend in 2024, joining the likes of Meta and Alphabet.

CRM's Artificial Intelligence Push and Growth Outlook

On the AI front, Salesforce launched its Agentforce AI tool in October 2024. Salesforce's new AI-powered platform allows customers to use existing software tools to easily program "agents" for automating tasks like customer service, marketing campaigns, and customer/business procurement and development.

Salesforce said last quarter that it landed 5,000 Agentforce deals since October, including more than 3,000 paid agreements.

CRM boasted that its Data Cloud & AI annual recurring revenue climbed 120% YoY last year (FY25). Digging deeper, Salesforce said "nearly half of the Fortune 100 are both AI & Data Cloud customers," and all of its "top 10 wins in Q4 included Data and AI."

The company highlighted that Agentforce handled 380K conversations, "achieving an 84% resolution rate, with only 2% of the requests requiring human escalation." The goal is to infuse generative AI across its entire product portfolio.

Salesforce's AI push is critical as businesses across the U.S. and beyond race to integrate artificial intelligence into their operations.

Salesforce's earnings outlook has held up since its fourth quarter release, landing it a Zacks Rank #3 (Hold). The tech company's EPS estimates have remained largely unchanged over the past year as well.

CRM is projected to grow its EPS by 9% this year and 11% next year, following 24% growth last year. The company has topped our EPS estimate in 19 out of the past 20 quarters.

CRM is projected to grow its revenue by 8% and 9%, respectively, adding $6.5 billion to the top line between FY25 and FY27.

Time to Buy the Tech Giant on the Dip?

CRM has skyrocketed 5,500% during the past two decades, blowing away MSFT's 1,700% and Tech's 720%.

Salesforce has jumped 280% in the last 10 years, roughly matching the Tech sector's 290%, but falling miles behind Microsoft's 860%.

The more mundane performance is fueled by its 60% gain in the past five years, lagging Tech's 115% and Microsoft's 150%.

CRM stock is down 16% YTD vs. Tech's 2% dip. The recent underperformance provides investors a chance to buy Salesforce stock 25% below its average Zacks price target and 20% below its December record.

The stock recently got rejected by its 200-day moving average. Yet, it remains above its 50-week moving average as it attempts to hold its ground at its 2020 breakout levels, while trading at neutral RSI levels.

Salesforce's improved earnings outlook has it trading at a 75% discount to its 10-year median at 33X forward 12-month earnings and in line with its industry.

CRM's PEG ratio, which factors in its longer-term earnings growth outlook, sits at 2.6, marking an 85% discount to its 10-year highs and only a slight premium to its industry.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

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