Salesforce Stock Caught in AI Crossfire as Analysts Clash

Salesforce shares hit multi-year lows as AI-driven 'seat compression' fears spark a sector selloff, despite the company's own AI revenue surging 169% year-over-year.

The rapid advancement of artificial intelligence is proving a double-edged sword for enterprise software giant Salesforce. While the company reports surging growth in its own AI products, a sector-wide selloff triggered by fears of obsolescence has driven its shares to multi-year lows, creating a stark disconnect between operational performance and market sentiment.

This pressure intensified dramatically last week. The catalyst was the Tuesday unveiling of Anthropic's powerful "Claude Mythos" model, which demonstrated AI's superior capability in identifying software vulnerabilities. The presentation exacerbated deep-seated investor anxieties about the future of traditional per-seat licensing models. In the four days that followed, Salesforce stock plummeted roughly nine percent, closing at $170.85—its lowest level since March 2023. This decline occurred even as broader markets stabilized, highlighting a targeted exodus from the software sector.

The selloff is far from isolated. Peers like Snowflake and Workday have been hammered, dragging a key software-sector ETF to its lowest point since late 2023. The core fear is "seat compression": the notion that autonomous AI agents could perform the work of multiple human employees, drastically reducing the number of individual software licenses a company needs. This potential erosion of recurring revenue has sparked a systematic de-risking by institutional investors, fundamentally repricing the entire SaaS landscape. The S&P 500 Software Index now trades at just 21 times expected earnings, a steep discount to its five-year average of 29.

Amid this turmoil, a clear analyst divide has emerged. On April 8, Oppenheimer fueled the downward spiral by slashing its price target on Salesforce from $275 to $250, citing concerns over near-term growth and the costs of scaling AI offerings. The stock, trading around €146 in European trading and far from its 52-week high of €261, seemed captive to the pessimism.

However, Wedbush analyst Dan Ives pushed back forcefully on Friday. He argues the market is misreading a critical transition. Feedback from Chief Information Officers, he contends, shows AI deployments are now leaping from pilot projects to large-scale rollouts at major enterprises. Ives believes established platform providers like Salesforce are best positioned to benefit as autonomous agent technology becomes embedded into standard business processes. He views the current selloff as an overreaction.

Internal metrics provide some support for this bullish case. Salesforce's proprietary AI product, Agentforce, now boasts an annual recurring revenue of $800 million, representing explosive year-over-year growth of 169%. The number of deals closed also jumped 50% quarter-over-quarter. The company is aggressively expanding this ecosystem, announcing a new partnership on Friday to provide cloud communications infrastructure for its "Agentforce Contact Center," aiming to deepen platform loyalty and accelerate AI adoption in service departments.

Furthermore, Salesforce continues to secure substantial, traditional enterprise contracts. It recently locked in a framework agreement with the U.S. Army worth up to $5.6 billion. The company's financial foundation remains solid, with fourth-quarter revenue for fiscal 2026 hitting $11.20 billion and earnings per share of $3.81. Management has set an ambitious revenue target of up to $46.2 billion for the full fiscal year 2027.

Concurrently, the company is deploying capital to support shareholders. Yesterday was the ex-dividend date for a increased quarterly payout; stockholders of record will receive $0.44 per share on April 23, a 5.8% raise from the prior period. Salesforce's board is also actively utilizing a massive $50 billion share repurchase program to provide additional support for the stock price.

All eyes now turn to May 27, when Salesforce reports earnings for the first quarter of fiscal 2027. The results will offer the clearest evidence yet on whether the explosive growth of Agentforce is translating into measurable top-line acceleration fast enough to offset the market's deep-seated fears about its core business. The clash between bullish fundamentals and bearish sector sentiment will reach a decisive point.