Key Takeaways:
Bank of America reinstated coverage on Salesforce (CRM) with an “Underperform” rating and a $160 price target, arguing that artificial intelligence is disrupting the company’s growth trajectory.
"Salesforce remains a deeply entrenched platform, yet we expect a structural reset driven by AI transition," Bank of America analyst Tal Liani said in a Monday note.
The $160 price target suggests approximately 8% downside from Friday's closing price. BofA's downgrade stems from three core concerns: muted net new customer additions, limited upsell potential, and an "underwhelming AI monetization pathway," which the bank noted added less than 2% to revenue in the most recent quarter.
The bearish call pressures a stock already down 35% year-to-date amid fears of AI disruption to traditional software models. While Salesforce has integrated AI through offerings like "Agentforce," BofA sees these as having "product challenges and limited impact."
Bank of America’s view contrasts sharply with the broader market. Of the 52 analysts covering Salesforce, 39 rate the stock as a “Buy” or “Strong Buy,” LSEG data shows. The bank’s stance also appears more cautious than its view on other enterprise software names, with BofA recently restarting coverage on competitor ServiceNow (NOW) with a “Buy” rating.
The downgrade highlights the critical challenge legacy software-as-a-service companies face in proving the return on their AI investments. For Salesforce, the negative call puts more pressure on management to demonstrate a clear and profitable AI strategy in its upcoming earnings report.
This article is for informational purposes only and does not constitute investment advice.
