Kyle Reidhead
CEO & Analyst of Milk Road/Milk Road AI
Salesforce is accelerating because of AI, since AI agents need a CRM as their source of truth for data. Companies are not building their own CRMs, which is extremely hard; they build agents that plug into Salesforce, as human workers do. Q2 showed the lowest revenue churn ever, Agentforce and Data revenue growing over 200% year on year, and rising seat sales. Some SaaS is cooked, but gems like Salesforce were left for dead. x.comÂ
Salesforce is priced as an AI loser while its business keeps growing, leaving a wide margin of safety. It trades at 12.4 times earnings versus an 11-year average of 44x and the S&P 500's 20.5x. Revenue rose 13% to $11.1 billion, contracted backlog is $67.9 billion, up 11%, and Agentforce ARR hit $1.2 billion, up 205%. At 12x, the stock tracks earnings compounding 13-16% a year; a re-rating to the market average implies about 70% upside. Holding up on red days suggests sellers are exhausted. x.comÂ
Salesforce's usage-based AI billing can expand revenue beyond traditional software seats. Agentforce ARR has surpassed $1.5 billion, with year-over-year growth more than doubling, while Data 360 supplies customer data for its agents. At about 14-15x forward earnings and a 7.8-8.2% trailing free-cash-flow yield versus the S&P 500 median of 4.5%, Salesforce is a top candidate for returning institutional capital seeking both defense and growth. x.comÂ
Salesforce is being treated as a slow, outdated software company even as it keeps growing recurring revenue, expanding margins and converting its massive customer base into earnings. Its latest quarter delivered 16% cRPO growth and a 52% jump in GAAP EPS. The narrative changes when Agentforce and its wider AI strategy become a measurable revenue driver rather than another product announcement. x.comÂ
Salesforce faces real AI threats: more competition, margin headwinds from compute costs and disruption risk for businesses like Tableau and Service Cloud. Agentforce is showing some momentum, and the stock felt oversold earlier, but it is not attractive at current levels. x.comÂ
Salesforce's AI monetization is moving from pilots into production, a direct hit to the SaaS seat-compression bear case. Consumption-based Agentforce and Zero Copy data are driving real net expansion. Agentforce ARR passed $1.5 billion, up 240%, and with Data 360 reached about $3.9 billion, while 3.2 billion agentic work units ran in the second quarter, up 97% sequentially. Revenue rose 11% to $11.35 billion in a clean beat, and fiscal 2027 guidance rose to $46.1-46.4 billion. x.comÂ
Salesforce is set to make a lot of money from AI as the market realizes it may be an AI winner, not a victim. Agentforce ARR reached $1.5 billion, up 240% year over year, and Claude will become Agentforce's default model through an Anthropic partnership, with secure CRM data access and 37 prebuilt sales skills. Contracted revenue expected over the next 12 months reached $33.5 billion, up 14%, its fastest bookings growth in four years. x.comÂ
Salesforce is underweight because it is adding debt for buybacks just as its AI pivot makes growth less certain. It issued $25 billion of senior notes to fund an accelerated buyback, and S&P revised its outlook to negative as leverage nears the 2x downgrade trigger; weak demand forced a 40 basis point concession. Core SaaS growth is slowing to high single digits, and Agentforce plus Data 360, at $2.9 billion ARR, are under 7% of revenue, exposed if AI seat cannibalization outpaces usage credits. … Show more
Salesforce's own AI model, Koa, is very important for Salesforce and a bull case for SaaS companies. Built with Nvidia and running inside Agentforce, Koa replaces reasoning Salesforce used to pay other AI labs for. Salesforce says it beats other models on CRM tasks such as qualifying leads, routing cases and booking follow-ups, with far fewer errors, after training on 27 years of CRM data patterns. Salesforce fully owns the model, and it stays inside its own systems. x.comÂ
Salesforce's strong free cash flow and healthy balance sheet support its setup as enterprise AI adoption, Agentforce and AI-driven workflow automation advance. Its earnings gap on four times average volume has been followed by a tightening formation. x.com x.comÂ
Salesforce is exposed to AI-native rivals aiming to own the sale itself rather than build a better CRM. Upstarts such as Attio, Monaco and Rox can capture the decision traces behind closed deals, a learning loop Claude cannot rebuild from Salesforce's fields. Its schema is more tax than foundation: relationship-driven work like recruiting and VC does not fit it, and young startups cannot be served profitably. Its 150k customers won't churn soon, but new AI-native firms may never install it. … Show more
Salesforce's poor M&A is literally half the reason its multiple stays low. Slack and Informatica are cited as examples, with Braze raised as a question; AI making Tableau obsolete in a few years would be a separate risk, not itself poor M&A. x.comÂ
