Salesforce Is Struggling to Sell the AI Dream and Investors Are Losing Faith
The crown jewel of SaaS is losing its luster. Software giant SalesforceCRM is down nearly 27% this year amid weak growth projections, following another 5% decline yesterday after reporting earnings. That marked its fifth straight quarter of sub-10% growth — far from the 20%+ growth streak it consistently enjoyed just three years ago.
Broken record: CEO Marc Benioff has been one of Silicon Valley’s loudest AI cheerleaders, boasting that artificial intelligence now handles 30% to 50% of work at Salesforce — from software engineering to customer service. The company has already conducted several major rounds of layoffs this year, and more could come as the CEO says “every single function” could be automated. While he’s busy celebrating that he “needs less heads,” customers aren’t exactly lining up for his Agentforce AI product.
- The firm’s projected Q4 revenue of $10.2B to $10.3B disappointed analysts, suggesting its AI offerings aren’t gaining the traction investors expected.
- Despite launching Agentforce late last year and closing 6K+ paid deals, Salesforce estimated $100M in ARR back in May — but didn’t update the number in its earnings call this week.
Drowning in a Sea of Agents
Salesforce is forcing AI features down consumers’ throats and even increasing the prices of its traditional software while doing it. Prices for its major products rose by 6% in August. Meanwhile, nimble AI-native startups and the emergence of “vibe coding” — tools that let companies easily build their own software — further pressure legacy software makers like Salesforce.
- KeyBanc warns that AI-written code and shrinking workforces threaten seat-based business models like Salesforce’s — two vulnerabilities the firm can’t easily fix.
- New companies looking to implement such tools are questioning whether to buy or vibe-code their own cheaper, customized version — without the headache of constant price hikes.
Cheap isn’t always good: Despite trading at just 21x forward price-to-earnings — near historic lows — analysts worry that without clear AI momentum, the multiple will continue compressing as growth decelerates. Even long-time Salesforce bull Rishi Jaluria of RBC Capital Markets downgraded the stock earlier this year — worrying that Agentforce’s growth will only continue to cool. The question now is whether Salesforce can innovate fast enough to outrun its own slowdown.