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After Earnings, Is Salesforce Stock a Buy, a Sell, or Fairly Valued?

With healthy multi-cloud deals and an expanding AI platform, here’s what we think of Salesforce stock.

Dan Romanoff, CPA 13 March, 2025 | 2:13PM
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Salesforce logo on building.

Salesforce CRM released its fourth-quarter earnings report on Feb. 26. Here’s Morningstar’s take on Salesforce’s earnings and stock.

Key Morningstar Metrics for Salesforce


What We Thought of Salesforce’s Earnings

Results were generally in line on both the top and bottom ends. Guidance was a little light on the top line for the year while being a few cents short on non-GAAP earnings per share. Quarterly performance is expected to improve as the year progresses.

Multi-cloud deals were healthy, with the top 100 averaging six clouds. Further, 75% of the largest deals in the quarter included vertical industry solutions, which is good for pricing.

Agentforce had lots of air time, with 3,000 paid deals in its first full quarter of availability. Management characterized the consumption pricing model for Agentforce as a net positive for the company in terms of revenue upside.

Management discussed a $20 million annual contract value deal that included roughly $13 million of seat-based (human) software and $7 million in Agentforce software. This serves as an early validation of the company’s agentic AI platform.

All the top 10 deals in the quarter included data cloud and AI, which is now generating $900 million in annual recurring revenue (up 120% year over year).

Salesforce Stock Price

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Fair Value Estimate for Salesforce

With its 3-star rating, we believe Salesforce stock is fairly valued compared with our long-term fair value estimate of $315 per share, which implies a fiscal 2026 enterprise value/sales multiple of 7 times, an adjusted price/earnings multiple of 28 times, and a 4% free cash flow yield.

We model a five-year compound annual growth rate for total revenue of 8% through fiscal 2030, which we think will be driven by solid growth in all clouds, with most notable strength coming from the data cloud. Our revenue forecast assumes modest acceleration after depressed growth in fiscal 2023 and 2024. We forecast non-GAAP operating margin to expand from 31% in fiscal 2024 (actual) to the upper 30% area in fiscal 2030, which we think is consistent with management’s new profitability focus.

Read more about Salesforce’s fair value estimate.

Salesforce Stock vs. Morningstar Fair Value Estimate

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Economic Moat Rating

For Salesforce overall, we assign a wide economic moat, arising primarily from switching costs, with the network effect serving as a secondary moat source. Based on the company’s product lines, we believe Sales Cloud, Service Cloud, and Salesforce Platform have earned wide moats, while Salesforce, Marketing and Commerce Cloud, and Data Cloud have carved out narrow moats. While services (a small portion of revenue) help facilitate software sales and contribute to customer relationships, we do not think the company’s professional services business would warrant a moat on its own. We believe Salesforce’s moat will probably allow the company to earn returns over its cost of capital over the next 20 years.

Read more about Salesforce’s economic moat.

Financial Strength

We believe Salesforce is a financially sound company. Revenue growth reflects a mature large-cap software company, while margins continue expanding. As of January 2025, Salesforce had $14.0 billion in cash and investments, offset by $8.4 billion in debt, mostly related to the Slack acquisition, resulting in a solid net cash position. Gross leverage sits at 0.7 times trailing non-GAAP EBITDA, which we do not view as problematic given that we expect the company’s strong and expanding free cash flow generation.

Read more about Salesforce’s financial strength.

Risk and Uncertainty

We assign Salesforce a High Uncertainty Rating. We believe CEO Marc Benioff will be difficult to replace, as he pioneered the software industry, co-founded the company, and led it to be a dominant force with a broad portfolio of sales and marketing related solutions.

We believe the most important metric for Salesforce investors is revenue growth. Therefore, we think continued deceleration in the Sales Cloud or growth that does not materialize as expected in the Service, Marketing, and Commerce Clouds or the Salesforce Platform would likely harm the stock.

Read more about Salesforce’s risk and uncertainty.

CRM Bulls Say

Salesforce dominates salesforce automation but still only controls 30% in a highly fragmented market that continues to grow double digits each year, suggesting there is still room to run.

The company has added legs to the overall growth story, including customer service, marketing automation, e-commerce, analytics, and artificial intelligence.

Management will likely focus on expanding margins after years of subscale profitability.

CRM Bears Say

It may be increasingly difficult for Salesforce to grow faster than its various end markets.

Salesforce has entered new areas via acquisition and has arguably paid material premiums. Integration risk is real, as is the risk of increasingly large, dilutive, or ill-conceived deals.

The company’s generative AI strategy has been a series of fits and starts, and while Agentforce looks promising, it may be just another iteration in an evolving approach.

This article was compiled by Gautami Thombare.


The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.

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About Author

Dan Romanoff, CPA  Dan Romanoff, CPA, is an equity research analyst on the technology, media, and telecommunications team for Morningstar.

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