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Investing.com -- DA Davidson downgraded Salesforce.com (NYSE:CRM) to Underperform from Neutral, saying the company is prioritizing its artificial intelligence ambitions at the expense of its core business, which is showing signs of broad deceleration.
The firm cut its price target on Salesforce to $200 from $250 and removed the company from its quality stock list, citing concerns over slowing growth across legacy products and recent acquisitions such as Slack, Tableau, and Mulesoft.
“We see this as the year Salesforce completes its transformation from SaaS pioneer to late-stage technology company and perennial share donor,” the analysts wrote, adding that an “entire ecosystem” has emerged to replace Salesforce products, with customers frequently describing them as outdated and cumbersome.
While DA Davidson noted early traction in Agentforce, the company’s AI initiative, analyst has concerns over the timing and scale of the pivot.
“We believe betting the whole company on this effort may be at the expense of the other 98% of the company’s business,” analysts say pointing to revenue slowdowns across key units and noting customers’ limited budgets for new AI tools amid broader tech modernization efforts.
Salesforce reported a $900 million annual revenue run-rate from AI and data products, but Davidson said much of this appears tied to bundled pricing rather than incremental demand.
The firm’s checks with customers and former employees also suggested skepticism about Agentforce’s maturity and return on investment.
The brokerage sees downside risk to fiscal 2026 estimates and expects continued deceleration in growth, especially in non-AI clouds.
It values Salesforce at 18 times its fiscal 2026 earnings per share, below peers, and now forecasts 5.5% revenue growth for the year, versus consensus expectations of 7.5%.