CRM Q1 Earnings: Will AI and Cloud Growth Outweigh Macro Challenges?

Salesforce, Inc. CRM is set to release its first-quarter fiscal 2026 earnings on May 28, and expectations are high. The company continues to benefit from the growing trend of digital transformation, as more businesses move to the cloud and look for ways to integrate artificial intelligence (AI) into their operations.

Even though the broader economy is facing headwinds, Salesforce is expected to deliver decent revenue and profit growth. Demand remains strong for its cloud-based software and AI-powered tools. The company is also gaining traction in international markets.

However, challenges such as slower deal-making and reduced tech spending by smaller firms could limit Salesforce’s upside this quarter.

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Click here to know how Salesforce’s overall fiscal first-quarter results are likely to be.

Cloud and AI Continue to Drive Salesforce’s Sales Growth

Salesforce remains one of the top names in enterprise software, and its business model — offering software through the cloud — keeps gaining momentum. The shift to remote and hybrid work has only made cloud adoption more important. Now, as AI tools become more common, Salesforce is pushing ahead with more automated and intelligent features in its software.

The company offers a wide range of products, from sales and marketing tools to commerce and customer service platforms. This variety helps it stay steady, even when some industries cut back on software spending.

A key growth driver for the first quarter is expected to be Salesforce’s AI tools, especially its Einstein Analytics platform. More companies are turning to AI to improve customer service, sales forecasting and operational efficiency. Salesforce has moved quickly to add generative AI features across its product lines, setting itself apart from competitors.

As the global market for AI-powered cloud services grows fast, Salesforce is in a good position to benefit. The company’s focus on AI, automation and data analytics is likely to have helped boost its first-quarter performance.

International Growth Adds More Upside for Salesforce

Salesforce’s success isn’t limited to the United States. The company has been expanding into international markets, tapping into rising demand for digital tools from companies across Europe and the Asia-Pacific region.

Many of these businesses are just beginning their digital and AI journeys, and Salesforce’s cloud-based products are seen as flexible and scalable solutions. This global expansion is likely to have played an important role in supporting CRM’s revenue growth in the first quarter.

Macroeconomic Headwinds Remain a Risk for Salesforce

While Salesforce is growing, it’s not completely shielded from the broader economic slowdown. Smaller businesses, a big part of its customer base, are watching their budgets more closely and slowing down spending on IT and software amid the ongoing macroeconomic uncertainties and geopolitical issues.

Salesforce has already noted that deals are taking longer to close. Customers are taking more time to review contracts and pricing, which can reduce the size of deals and delay when revenues are recognized. These slower deal cycles may have some impact on first-quarter numbers.

Still, Salesforce’s core Subscription and Support segment is expected to hold up well. Our estimate suggests it brought in about $9.2 billion in the quarter, up 7.3% year over year. This suggests customers are sticking with the platform despite the tough economic environment.

CRM’s Profitability Focus Keeps the Bottom Line Strong

One of the most important changes at Salesforce recently has been its push for better profitability. Through cost-cutting, staff reductions and improving how it operates, the company has been able to increase earnings, even with slower revenue growth.

Even if deal sizes shrink a bit, Salesforce’s ability to control costs puts it in a good position to grow profits. Its leadership in the customer relationship management space, combined with opportunities to upsell AI tools to existing customers, should help the company continue improving its margins over time.

CRM anticipates non-GAAP earnings per share to be in the band of $2.53-$2.55 for the first quarter. The consensus mark for non-GAAP earnings has remained unchanged at $2.54 per share over the past 60 days, which calls for a 4.1% increase from the year-ago quarter’s level. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Salesforce’s Zacks Rank and Stocks to Consider

Currently, CRM carries a Zacks Rank #3 (Hold).

Impinj PI, StoneCo STNE and Rambus RMBS are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Impinj, StoneCo and Rambus each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Impinj’s 2025 earnings has been revised upward by 11 cents to $1.68 per share over the past 30 days, and suggests a year-over-year decrease of 20.4%. Impinj shares have plunged 32.7% over the past year.

The Zacks Consensus Estimate for StoneCo’s 2025 earnings has moved upward by 17 cents to $1.43 per share in the past 30 days, implying 5.9% year-over-year growth. StoneCo shares have fallen 7.1% in the trailing 12 months.

The Zacks Consensus Estimate for Rambus’ 2025 earnings has been revised upward by 14 cents to $2.47 per share in the past 30 days, suggesting a year-over-year increase of 23.5%. Rambus shares have declined 4% over the past year.

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

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