Salesforce's AI Push Grows With Informatica: Time to Hold the Stock?

Salesforce, Inc. CRM has made another big move in its artificial intelligence (AI) journey by agreeing to buy data management company Informatica Inc. INFA for around $8 billion. The deal, announced as an all-cash transaction, aims to strengthen Salesforce’s capabilities in data handling and AI integration. As Salesforce continues to position itself as a leader in enterprise AI, this deal, which is expected to close in early 2027, could play a key role.

With this bold strategic step that could strengthen Salesforce’s long-term value proposition, investors must be wondering if they should hold onto CRM stock now.

Informatica Buyout to Fortify Salesforce’s AI Capabilities

Informatica is known for its powerful data tools, including data integration, governance, quality and metadata management. These capabilities will help Salesforce improve its AI platform, Agentforce, and its Data Cloud product. Salesforce says this deal will help build a solid data foundation for AI, especially autonomous AI agents, which need clear, trusted and well-managed data to function properly.

Marc Benioff, CEO of Salesforce, said the acquisition will create the most complete data platform for AI in the industry. Combining Informatica’s tools with Salesforce’s software, including MuleSoft and Tableau, will help customers make better use of their data and AI solutions.

From a product standpoint, the acquisition makes sense. Informatica brings features that Salesforce needs to support advanced AI capabilities. For example, AI agents will now be able to better understand the context, quality and origin of data. This helps ensure responsible and reliable AI-driven decisions. The enhanced capabilities will also help Salesforce’s key competitors in the enterprise software space, including SAP SE SAP and Microsoft Corporation MSFT.

Informatica Acquisition: Financial Fit for Salesforce

Financially, the deal seems well-structured. It will be funded with Salesforce’s cash and new debt. The company expects it to be accretive to non-GAAP earnings and free cash flow starting in the second year. In other words, while it’s a large acquisition, Salesforce doesn’t expect it to hurt profits or cash in the long run.

Most importantly, the deal doesn’t derail Salesforce’s financial discipline. The company has been focused on improving margins and returning capital to shareholders. This acquisition fits within that broader strategy, aiming for long-term gains without losing its near-term focus.

Moreover, the acquisition will give a fresh boost to Salesforce’s top-line growth, which has been witnessing a decelerating trend over the past year. Revenue growth has decelerated from its historical double-digit pace to single-digit increases in recent quarters. This slowdown reflects cautious enterprise spending amid macroeconomic uncertainties and geopolitical issues. The Zacks Consensus Estimate for revenues indicates that this trend will persist, with mid-to-high single-digit growth expected for fiscal 2026 and 2027.

The slowing growth trend has weighed on investor sentiment. Shares of the company have plunged 17.1% year to date (YTD), underperforming the Zacks Computer – Software industry, which has risen 4.3%. CRM stock has also underperformed other enterprise software companies, including SAP and Microsoft. YTD, shares of SAP and Microsoft have rallied 21.9% and 9.2%, respectively.

Conclusion: Hold Salesforce Stock for Now

Salesforce’s acquisition of Informatica reinforces its long-term AI vision despite current stock pressures. The deal enhances data infrastructure, which is critical for AI growth. Though near-term revenue trends are soft, Informatica’s acquisition positions Salesforce for stronger innovation and competitiveness. Considering the factors, it is prudent for investors to continue holding CRM stock and watch for future upside.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research